Mortgage rates declined for a third straight week, dropping rates closer to their spring-2013 lows but still over half of a percentage point higher than they were back then.
Freddie Mac announced today that 30-year fixed-rate mortgages declined from 4.19 percent to 4.12 percent, 41 basis points less than the year-ago figure of 4.53 percent. 15-year fixed mortgages also declined, slipping six basis points from 3.36 percent to 3.30 percent. Average points, or fees, were up from 0.4 to 0.5 this week for 30-year FRMs, and steady at 0.5 points for 15-year FRMs.
Despite the Federal Reserve’s continued tapering of economic stimulus, mortgage rates have continued on a downward trajectory, which is in contrast to what market analysts had forecasted prior to the start of 2014. This stimulus had been instrumental in keeping long-term interest rates low, and after a gradual series of tapering moves that began late last year, the “QE3” initiative may wrap up by the end of October. The Fed, however, has reaffirmed that it plans to keep short-term rates at their record-low, near-zero levels unless inflation rises markedly.
Another interesting backdrop to this week’s mortgage rate decline is the general cooling of the U.S. housing market. Price growth was at only 6.4 percent year-over-year for the month of August, a huge drop-off from the double-digit gains recorded in the latter part of 2013. Another housing stat that has gone down recently is sales of existing homes, as National Association of Realtors data shows a decline for the month of August, and the continued fence-sitting of first-time buyers.