Mortgage interest rates fell back below the 5 percent threshold this past week, despite predictions that sharp increases are on the way as the government winds down a program designed to support credit markets.
Median interest rates on 30-year fixed-rate mortgages fell to 4.99 percent, according to the weekly Freddie Mac national survey, down from 5.06 percent the week before. It’s the third consecutive week that rates have declined after hitting a recent high of 5.14 percent on Dec. 31.
Rates on other types of mortgages fell as well, with median rates on 15-year fixed-rate mortgages declining to 4.40 percent, down from 4.45 percent last week; and rates on 5-year Treasury indexed hybrid adjustable rate mortgages down to 4.27 percent, from 4.32 percent the week before.
Freddie Mac officials attributed the declines to decreasing bond yields over the past few weeks and an anticipation, reflected in federal funds futures, that the Federal Reserve will not increase its target rate at its upcoming meeting next week.
Many observers have been predicting steep increases in mortgage interest rates once the Federal Reserve ends its program of purchasing mortgage-backed securities in March. Many economists have been predicting that median rates on 30-year mortgages will hit 6 percent by midyear, after the program concludes. The Fed’s massive purchases of mortgage securities and Treasury bonds send interest rates plummeting as soon as the program was announced last March and market observers have been anxious ever since about what will happen when the program concludes.
