Mortgage Rates Fall, But Rises Likely Next Week

Freddie Mac says that the drop in mortgage rates this week may be temporary, due to the Fed’s recent announcement that it would begin winding down its bond-purchasing stimulus program sooner than originally thought.

The Federal Reserve hinted Wednesday that interest rates could start to rise in early 2015, and that it is continuing to taper its economic stimulus programs, including its bond-purchase program that had been aimed at holding down long-term interest rates and increasing job growth. The Fed said that rates could remain low for “a considerable time” after its bond purchase program ends, but new Fed Reserve Chair Janet Yellen then later clarified that would be about six months time frame.

“The rate on the 10-year treasury note rose following the Fed’s announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week,” says Frank Nothaft, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending March 20:

  • 30-year fixed-rate mortgages: averaged 4.32 percent, with an average 0.6 point, dropping from last week’s 4.37 percent average. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.32 percent, with an average 0.6 point, falling from last week’s 3.38 percent average. A year ago, 15-year rates averaged 2.72 percent at this time.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.02 percent, with an average 0.4 point, falling from last week’s 3.09 percent average. A year ago, 5-year ARMs averaged 2.61 percent.

Source: Freddie Mac and “Fed Changes Guidance on Raising Rates,” USA Today (3/19/14)