Mortgage Rates Reverse Course and Head Lower
Freddie Mac released its weekly update on national mortgage rates Thursday morning, and -- rumors of an impending Fed "taper" notwithstanding -- the numbers show that rates are actually on the decline once again.
Thirty-year fixed-rate mortgages (FRMs) got cheaper by 13 basis points over the past week, falling to 4.22%, while 15-year FRMs dropped eight b.p. to land at 3.27%.
5/1 adjustable-rate mortgage (ARMs) followed the FRMs down, shedding six basis points to arrive at 2.95%. One-year ARMs, in contrast, held steady at 2.61% for the third straight week.
Freddie Mac Vice President and Chief Economist Frank Nothaft observed in a statement that reports have been filtering in of weaker manufacturing growth and declines in overall inflation rates. Plus, "the consumer price index also unexpectedly fell during the month," observed Nothaft.
All of this data would tend to lend support to any "doves" on the Fed, inclined to continue the government's policy of buying mortgage bonds at the ongoing rate of $85 billion a month. So long as this policy continues, it will continue to depress interest rates in general, and mortgage interest rates in particular.
Rates had spiked over the summer and reached a two-year high in July on speculation that the Federal Reserve would slow its bond purchases later this year. But the Fed held off in September and now appears poised to wait at least a few more months to see how the economy performs.
-- Material from The Associated Press was used in this report.
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