Following a significant lull through the beginning of August and last week’s spike, key mortgage rates declined for the first time in over a month. The recent fluctuation in rates is attributed to ongoing concerns that the Federal Reserve will curtail its bond-buying program.
After a 0.18 percentage point increase a week ago, the average rate on a 30-year fixed mortgage fell slightly from 4.58 percent to 4.51 percent, according to the latest survey from mortgage buyer Freddie Mac. One year ago, the average on a 30-year fixed loan was trending at 3.59 percent.
This week’s average marks only the third time this year that the 30-year fixed has registered above 4.5 percent ,and it’s nearly a full percentage point higher than it was in May. The rise has reduced affordability for some potential home buyers, as evidenced by a recent drop in home sales.
The average on a 15-year fixed mortgage also showed signs of settling this week. After seeing a 0.16 percentage point increase last week, the average on a 15-year fixed loan dipped by 0.06 percentage point from 3.6 percent to 3.54 percent. It previously achieved a historic low in early May, when it dropped to 2.56 percent, but it has remained above the 3 percent mark since June. This week’s increase represents a 0.68 percentage point increase year-over-year.
Echoing his previous statements, Freddie Mac vice president and chief economist Frank E. Nothaft again pointed to the Federal Reserve as the main culprit behind the flux in rates, which has been attributed to a slowing in the housing-market recovery and the overall economy.
“The Fed is monitoring the housing market closely after the run-up in mortgage rates over the past few months,” Nothaft said in a statement. “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.”
Following a slight drop, the average on a five-year hybrid adjustable rate mortgage saw a slight uptick this week. Previously trending at 3.21 percent, the five-year ARM rose by 0.03 percentage point to 3.24 percent. After remaining static at 2.67 percent that past two weeks, the one-year ARM also registered a slight drop. The one-year ARM fell by 0.03 percentage point from 2.67 percent to 2.64 percent week-over-week.
Looking ahead, potential home buyers and refinancers may want to stand pat for now. In the latest Mortgage Rate Trend Index by Bankrate.com, 36 percent of the mortgage experts and analysts polled believe rates will trend downward over the next week. Another 46 percent predicted rates will remain static.
“The daily and weekly techs are both upcrossed to bullish (higher prices, lower yields),” said RPM Mortgage senior loan officer Dick Lepre. “So we should get that 15-day dip in rates we have been waiting for.”