Mortgage rates reverse course, head downward
After heading upward for much of the past month, mortgage rates reversed course and dropped week-over-week, Freddie Mac said in its weekly mortgage report.
According to Freddie Mac’s Primary Mortgage Market Survey for the week ending August 30, 2012, interest rates for both fixed-rate mortgages and adjustable-rate mortgages (ARMs) dropped on a weekly basis.
Average rates for 30-year fixed-rate mortgages fell to 3.59 percent in the latest data, down from 3.66 percent the previous week, while 15-year fixed mortgages dropped to an average rate 2.86 percent after averaging 2.89 percent the previous week.
One year ago at this time, 30-year fixed mortgages averaged 4.22 percent, and 15-year fixed mortgages averaged 3.39 percent.
Additionally, 5-year ARMs fell to an average rate of 2.78 percent, down from last week’s 2.80 percent average, while 1-year ARMs fell from an average of 2.66 percent last week to 2.63 percent in the most recent data.
One year ago at this time, 5-year ARMs averaged 2.96 percent and 1-year ARMs averaged 2.89 percent.
Frank Nothaft, vice president and chief economist at Freddie Mac, spoke of the connection between the recent drop in mortgage rates, a drop in bond yields and an overall drop in economic activity.
“Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31st and August 1st minutes of the Federal Reserve’s monetary policy committee,” Nothaft said in a statement.
Nothaft continued: “Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if needed.”