Weak Housing Data May Be Behind Falling Mortgage Rates
Freddie Mac released its weekly update on national mortgage rates on Thursday morning, showing modest declines in most rates.
Both 30-year fixed-rate mortgages (FRMs) and 15-year FRMs declined over the past seven days, with 30-year FRMs dropping three basis points to 4.17%, and 15-year FRMs slipping just one b.p. to 3.30%. One year ago, 30-year FRMs averaged 3.93%, and 15-years 3.04%.
5/1 adjustable-rate mortgages (ARMs) showed the week's biggest change in price, falling five basis points to 3.00%. 1-year ARMs, in contrast, inched up a single basis point to 2.41%. A year ago, 5/1 ARMs were at 2.79%, and 1-year ARMs at 2.57%.
Freddie Mac vice president and chief economist Frank Nothaft noted a possible connection between rates and weak housing starts and building permits data for May. Housing starts were down 6.5%, said Nothaft in a statement, and building permits down 6.4%. Inflation, on the other hand, as represented by the Consumer Price Index or CPI, was up 0.4% in May, somewhat more than expected. As a general rule, inflation tends to push mortgage prices up -- and this may explain why rates didn't fall further despite the weak housing data.
The article Weak Housing Data May Be Behind Falling Mortgage Rates originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.