Key Mortgage Rate Falls Back Below 5%

Mortgage ratesThe 30-year fixed-rate mortgage averaged 4.99 percent for the week ending today, down from 5.06 percent last week and down from the most recent peak of 5.14 last month, according to Freddie Mac’s weekly survey.
The key mortgage rate had fallen as low as 4.71 percent in December, a record going back to 1971 when Freddie Mac started tracking rates.
A year ago, the average 30-year fixed rate was 5.12 percent.
Mortgage applications have been on the rise in recent weeks with buyers concerned over the steady upward trend of rates and the looming deadline for a federal tax credit for home buyers.
“Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5% once more,” said Frank Nothaft, Freddie Mac chief economist, in a statement.
Freddie Mac has projected that the 30-year mortgage rate would hit 5.1 percent sometime in the first quarter, then work its way up to 6 percent by the fourth quarter.
Economists will be monitoring the aftermath from the government’s winding down of its purchases of mortgage-backed securities from Freddie Mac and Fannie Mae.
By discontinuing its purchase program in April, the central bank is hoping that private buyers of mortgage-backed securities will return, and rates won’t rise much after that.
The winding down of the Fed’s programs poses “the risk of a rise in mortgage rates relative to benchmark yields,” Nothaft said.

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