Mortgage Rates Ease Slightly, But Likely Not for Long

Mortgage Rates Ease Slightly, But Likely Not for LongAverage mortgage rates reported by Freddie Mac for the week pulled back slightly from their run-up of the last few weeks,with the 30-year fixed-rate down to 3.93 percent from last week’s 3.98 percent.
But the long-term rate’s retreat is likely temporary as the Federal Reserve Chairman Ben Bernanke Wednesday signaled that the central bank would likely start to reduce it’s bond-buying program later this year.
Although the Fed’s intention is to keep interest rates low enough to spur economic growth, U.S. Treasuries have been selling off, pushing up yields. That should provide plenty of fuel for mortgage rates to push higher in coming weeks, and likely hover past 4 percent for a while.
The Fed said that economic growth has been expanding at a moderate pace and that labor market conditions have shown further improvement, although the unemployment rate remains elevated.
The improving housing sector is helping fuel economic recovery. Single-family housing permits increased nearly 2 percentage points in May to an annualized pace of 649,000 homes, the most since May 2008.
But market participants are concerned that rising interest rates and home prices may slow down the housing market’s momentum.
Meanwhile, the Mortgage Bankers Association said Wednesday that mortgage applications last week decreased 3 percent, as the refinance share of activity held at 69 percent.
The average contract interest rates for 30-year fixed mortgage was slightly above 4 percent, according to the MBA’s figures for last week.
Here is Freddie Mac’s overview for mortgage rates this week, released Thursday:
30-year fixed-rate mortgage averaged 3.93 percent, with an average 0.8 point for the week ending June 20, 2013, down from last week when it averaged 3.98 percent. Last year at this time, the 30-year averaged 3.66 percent.
15-year fixed rate averaged 3.04 percent, with an average 0.7 point, down from last week when it averaged 3.10 percent. A year ago at this time, the 15-year averaged 2.95 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.79 percent, with an average 0.5 point, the same as last week. A year ago, the 5-year ARM averaged 2.77 percent.
1-year Treasury-indexed ARM averaged 2.57 percent, with an average 0.4 point, down from last week when it averaged 2.58 percent. At this time last year, the 1-year ARM averaged 2.74 percent.

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