Mortgage Rates Start to Slide; 30-Year Fixed at 4.5%

Mortgage Rates Start to Slide; 30-Year Fixed at 4.5%Average fixed mortgage rates declined this week as the same weakening economic recovery which prompted the Federal Reserve to keep intact its bond-buying program also put a lid on near-term rate increases.
The 30-year fixed rate made a moderate move downward, from 4.57 percent to 4.5 percent compared to last week, according to Freddie Mac.
But the benchmark home loan may slide further in coming weeks after the Fed’s surprising move to delay “tapering” or reducing its $85 billion monthly stimulus program.
Mortgage rates have increased more than one percentage point since early May when speculation about Fed tapering began.
Retail sales rose 0.2 percent in August, which was nearly half of July’s 0.4 percent increase.
In addition, industrial production in August grew 0.4 percent, less than the market consensus forecast. And consumer sentiment fell for the second consecutive month in September to the lowest reading since April.
“This, in part, was why the Federal Reserve chose to maintain its MBS (mortgage backed securities) and bond-buying program at its September 12th and 13th monetary policy committee meeting,” said Frank Nothaft, vice president and chief economist, Freddie Mac.
Federal Reserve Chairman Ben Bernanke also cited the tightening of financial conditions observed in recent months, “which in the case of the housing market means the rise in mortgage rates since May,” Nothaft said.
Here is Freddie Mac’s overview of mortgage rates:
30-year fixed-rate mortgage averaged 4.50 percent, with an average 0.7 point, for the week ending September 19, 2013, down from last week when it averaged 4.57 percent. A year ago at this time, the 30-year fixed rate averaged 3.49 percent.
15-year fixed rate this week averaged 3.54 percent, with an average 0.7 point, down from last week when it averaged 3.59 percent. A year ago at this time, the 15-year fixed rate averaged 2.77 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.11 percent this week, with an average 0.5 point, down from last week when it averaged 3.22 percent. A year ago, the 5-year ARM averaged 2.76 percent.
1-year Treasury-indexed ARM averaged 2.65 percent this week with an average 0.4 point, down from last week when it averaged 2.67 percent. At this time last year, the 1-year ARM averaged 2.61 percent.

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