Fixed mortgage rates eased back down this week, giving back part of last week's sharp increases as fears diminished somewhat over the Federal Reserve's plans to start scaling back its program of Treasury bond purchases.
Average interest rates on 30-year fixed-rate mortgages fell back to 4.29 percent, down from 4.46 percent last week. The average on 15-year fixed-rate loans declined to 3.39 percent, down from 3.50 percent the week before. Borrowers also spent less on discounts to obtain those rates, as the average points and fees paid on both loan types dropped to 0.7 points, down from 0.8 points the previous week.
Meanwhile, the average initial rate on 5-year Treasury indexed adjustable-rate mortgages (ARMs) ticked slightly higher, rising to 3.10 percent, up from 3.08 percent last week. Discounts also averaged 0.7 points; all rates are based on an 80 percent loan-to-value ratio.
Markets less jittery
"Fixed mortgage rates fell over the holiday week as market concerns over the timing of the Federal Reserve's pullback in bond purchases eased somewhat," said Frank Nothaft, Freddie Mac chief economist. "Rates are still low by historical standards and should continue to aid in housing affordability and the ongoing recovery of the housing market."
Nothaft noted that pending home sales in May increased at their fastest rate in more than six years, according to a report this week by the National Association of Realtors, while the Commerce Dept. reported that spending on residential construction rose in four of the first five months of the year.
Last week's rate increase was the largest one-week rise in more than a quarter century, with average rates on both 30- and 15-year fixed-rate loans increasing by about one-half of a percentage point.