Residential financing more affordable as rates drop
Posted on Thursday, September 19, 2013 at 11:13:21 AM
Concerns about the housing market might be put on hold for a moment. Over the past several weeks, residential financing rates have been on the rise. Now, that number is dropping once again, as the Federal Reserve announces plans to hold off on any major changes.
A 30-year fixed-rate mortgage now averages 4.5 percent, according to the Freddie Mac Primary Mortgage Market Survey. Last week, that figure was 4.57 percent, and the drop is closely linked to the Fed continuing its bond buying program.
In addition, a 15-year FRM averaged 3.54 percent, also down from the previous week. Both a 5-year and a 1-year adjustable-rate mortgage declined as well.
"Mortgage rates drifted downwards this week amid signs of a weakening economic recovery," said Frank Nothaft, vice president and chief economist for Freddie Mac. "Retail sales rose 0.2 percent in August which was nearly half of July's 0.4 percent increase. In addition, industrial production in August grew 0.4 percent, less than the market consensus forecast. And lastly, consumer sentiment fell for the second consecutive month in September to the lowest reading since April."
If the economy improves, the Fed may reevaluate its bond-buyback decision, according to CNN Money. That might mean more changes for residential financing are ahead. Any increases aren't expected to hurt demand, and rates are still historically affordable.