Slipping Mortgage Rates Now Lower Than a Year Ago, Spurring Affordability; 30-Year at 4.14%

Weaker than expected U.S. economic growth is having a positive effect on mortgage rates. They are now lower than a year ago when rates jumped in the initial anticipation of the Federal Reserve’s tapering of bond purchases.

What does this mean for the average consumer looking to buy a home? Rates are holding near the 4 percent mark, a still historically low range.  The all-time low for the 30-year fixed was set in November 2012 at 3.31 percent, according to Freddie Mac.
This week, the 30-year fixed rate mortgage slipped to 4.14 percent, from 4.17 percent the previous week. But more telling is the comparison to a year ago, when the benchmark home loan stood at 4.46 percent and re-financing slowed considerably from its heady days of 2011-2012.
“Mortgage rates were down following the release of first quarter real GDP final estimate, which fell at a 2.9 percent annualized rate, a steeper than expected decline and the worst reading since the first quarter of 2009,” said Frank Nothaft, vice president and chief economist, Freddie Mac.
Meanwhile, the seasonally-adjusted S&P/Case-Shiller 20-city home price index was up only 0.2 percent in April from the previous month.
“On a year-over-year basis, prices remained strong in April up 10.8 percent, but slower than the 12.3 percent in March,” Nothaft.
A slower pace of home price growth, combined with historically low mortgage rates opens up the market for more home buyers, especially in areas were inventories are finally reversing trend and rising.
Here is Freddie Mac’s overview of rates for the week:
30-year fixed-rate mortgage (FRM) averaged 4.14 percent, with an average 0.5 point for the week ending June 26, 2014, down from last week when it averaged 4.17 percent. A year ago at this time, the 30-year FRM averaged 4.46 percent.
15-year FRM this week averaged 3.22 percent, with an average 0.5 point, down from last week when it averaged 3.30 percent. A year ago at this time, the 15-year FRM averaged 3.50 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98 percent this week, with an average 0.3 point, down from last week when it averaged 3.00 percent. A year ago, the 5-year ARM averaged 3.08 percent.
1-year Treasury-indexed ARM averaged 2.40 percent this week, with an average 0.4 point, down from last week when it averaged 2.41 percent. At this time last year, the 1-year ARM averaged 2.66 percent.

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