Mortgage Rates Head Back Down

Mortgage rates eased back down this week, breaking a streak of four consecutive weekly increases for fixed-rate loans.

Average interest rates fell across the board, with 30-year fixed-rate mortgages falling to 3.59 percent in the weekly Freddie Mac rate survey, released today, down from 3.66 percent last week. Meanwhile, average interest rates on 15-year fixed-rate mortgages dropped to 2.86 percent, down from 2.89 percent last week.

Initial rates on adjustable-rate mortgages (ARMs) also declined slightly, with the average on 5-year Treasury indexed ARMs dropping to 2.78 percent, down from 2.80 percent last week. All rates include an average of 0.6 points in fees and discount points.

Rates dropped following indications that the Federal Reserve may soon take additional steps to boost the economy, according to Frank Nothaft, Freddie Mac chief economist. Such measures typically involve efforts to reduce interest rates, which led to a decline in Treasury bond yields, with mortgage rates following.

Housing market improving

At the same time, Nothaft noted that the housing market has been showing gradual improvement in recent months, with several positive developments reported this week. The Census Bureau reported that new home sales rose 3.6 percent in July to a seasonally adjusted annual rate of 352,000 units, a 25 percent increase over the July 2011 level.

Meanwhile, the National Association of Realtors reported this week that pending home sales were up 2.4 percent last month, with a 12.4 percent annual gain over July 2011 levels. Both new home sales and pending sales figures set or equaled the highest reported levels since April 2010, just before the deadline for the first-time homebuyer tax credit program, with new home sales matching the May 2012 figures.

In addition, Standard & Poor’s reported that U.S. home prices showed their first annual increases in nearly two years in the second quarter of the year. The S&P/Case Shiller National Home Price index showed a 1.2 percent gain over the second quarter of 2011, boosted by a 6.9 percent quarterly gain over the first quarter of 2011.

This article was first published at: http://www.mortgageloan.com/mortgage-rates-head-back-down-9224