Mortgage rates are down again this week, easing concerns that the recent increases might put a crimp in the recovering housing market.
Average interest rates declined for all three major loan types in this week's Freddie Mac rate survey, led by 30-year fixed-rate mortgages, which eased to 4.31 percent, down from 4.37 percent last week. Fifteen-year fixed-rate loans dropped to an average of 3.39 percent, down from 3.31 percent, while average initial rates on 5-year Treasury indexed adjustable-rate mortgages (ARMs) were down a single basis point (0.01) to 3.16 percent.
Fixed-rates included an average of 0.8 points in fees and discounts; ARMs had 0.7 points. All averages are for loans with an 80 percent loan-to-value ratio, based on new loans backed by Freddie Mac this past week.
Good news for homebuyers
"Mortgage rates eased for the second consecutive week which should help to alleviate market concerns of a slowdown in the housing market," said Frank Nothaft, Freddie Mac chief economist. He noted that the National Association of Realtors reported this week that existing home sales in June were their highest in nearly four years, while the Census Bureau reported that new home sales in June were the strongest since May 2008.
There's been concern that higher mortgage rates, combing with rising home prices, could dampen what appears to be a sustained recovery in housing. Home prices have been on the rise, driven in part by a lack of available properties as many would-be sellers remain on the sidelines because they are underwater on their mortgages. That's believed to be one of the figures driving recent demand for new homes.
The Federal Housing Finance Agency (FHFA) reported this week that May home prices were up for a 16th consecutive month, posting a 7.3 percent increase over their level of one year earlier and were at their highest since September 2008.