Average 30-Year US Mortgage Rates Drop
- Updated: October 11, 2014
In addition, one of the most popular options for people who refinance is the 15-year mortgage, which also declined, from 3.36% to 3.3%. According to Frank Nothaft, chief economist with Freddie Mac (OTC: FMCC), fixed mortgage rates (FRM) fell during a period of dismal forward projections from the Federal Reserve but also growing concerns pertaining to economic growth in Europe.
Actions of the Federal Reserve often influence yield on a 10-year Treasury note, which in turn has a direct impact on mortgage rates. In Thursday’s mid-day trading, the 10-year note fell sharply from 2.41% to 2.32%. In the meantime, the rate for a five-year Treasury indexed hybrid adjustable rate mortgage (ARM) dropped from 3.06% to 3.05% while the one-year rate was unmoved at 2.42%.
Lower mortgage rates come during a time of speculation that the Federal Reserve could abandon its nearly six-year policy of keeping short-term rates at record lows. However, at the weekly meeting, Federal Reserve policymakers confirmed they will hold shorter-term rates close to zero levels until rising inflation indicators are seen.
A cooling off within the housing market coincides with falling mortgage rates. In August, average price growth experienced a slowdown, increasing slightly to 6.4% compared to the same time last year. The current rate is also down from yearly average gains that hit as high as 12% toward the end of 2013.
Sales of existing homes are being impacted in much the same way with a reported decline in August. According to the National Association of Realtors, first-time homebuyers have not yet returned to the housing market and the number of investors buying properties is down. In comparison, new home sales were up in August but still short of historic averages.
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