Fixed Mortgage Rates Drop
Freddie Mac released its weekly update on national mortgage rates this morning, showing fixed mortgage rates decreasing, while adjustable rate mortgages (ARMs) seesawed.
Thirty-year fixed rate mortgages (FRM) fell seven basis points from last week's tally, landing at 4.51%. Fifteen-year FRMs slipped six b.p. to 3.54%. Both numbers remain at two-year highs.
Adjustable rate mortgages (ARMs) were varied. 5/1 ARMs rose three basis points to 3.24%; one-year ARMs dropped three b.p. to 2.64%.
Freddie Mac Vice President and Chief Economist Frank Nothaft noted in a statement that "the Fed is monitoring the housing market closely after the run up in mortgage rates over the past few months. The 13.4 percent drop in new home sales in July led financial markets to speculate whether the Fed might delay reducing its bond purchases and allowed long-term bond yields and fixed mortgage rates to decline over the week." This uncertainty over the Fed's intentions may explain why mortgage rates are moving in different directions this week.
Rates have risen more than a full percentage point since May when Fed Chairman Ben Bernanke first signaled that the Federal Reserve might reduce its bond purchases later this year. The purchases have helped keep long-term interest rates low.
Mortgage rates remain low by historical standards. But the sudden spike has begun to slow the housing recovery's momentum.
-- Material from The Associated Press was used in this report.
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