Average 30-Year Mortgage Rate Moves Higher to 4.51%

Average 30-Year Mortgage Rate Moves Higher to 4.51%After a brief pullback last week, the 30-year fixed rate mortgage moved higher this week to 4.51 percent on more speculation that the Federal Reserve will reduce bond purchases later this year.
That sentiment was bolstered by June’s strong employment report, according to Freddie Mac’s weekly update on average mortgage rates.
However, there are indications that the surge in mortgage rates may ease.
The minutes of the June 18th and 19th Federal Reserve’s monetary policy committee meeting, released July 10th, said that many members indicated further improvement in the labor market would be required before it would be appropriate to slow the pace of bond purchases.
The minutes, along with new statements Wednesday by Fed Chairman Ben Bernanke, indicated that a tapering of the $85 billion in monthly bond and securities purchases was separate from the central bank’s efforts to keep interest rates low as the economy continues to recover.
The Fed is not expected to raise the benchmark federal funds rate from “near zero” – its posture since 2008 – anytime in the foreseeable future.
The central bank uses the funds rate to control the interest rate banks charge for loans and pay for deposits. The Fed mandates that banks keep a certain percentage of deposits on hand each night.
Raising the federal funds rate makes it more expensive to borrow. And that would lower the supply of available money, which increases short-term interest rates and helps keep inflation in check.
Here is Freddie Mac’s overview for the week:
30-year fixed-rate mortgage averaged 4.51 percent, with an average 0.8 point, for the week ending July 11, 2013, up from last week when it averaged 4.29 percent. Last year at this time, the 30-year averaged 3.56 percent.
15-year fixed rate averaged 3.53 percent, with an average 0.8 point, up from last week when it averaged 3.39 percent. A year ago at this time, the 15-year averaged 2.86 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.26 percent this week, with an average 0.7 point, up from last week when it averaged 3.10 percent. A year ago, the 5-year ARM averaged 2.74 percent.
1-year Treasury-indexed ARM averaged 2.66 percent, with an average 0.5 point, unchanged from last week. At this time last year, the 1-year ARM averaged 2.69 percent.

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