Lack of Fed changes lead mortgage rates to fall further down
Posted on Thursday, October 24, 2013 at 10:39:33 AM
A number of economic conditions hinge on the Federal Reserve, and over the past few months residential financing rates have been closely tied to the central bank's policies.
Now, given the current state of the economy, the Fed appears to be holding steady with its bond-buyback purchases, according to Freddie Mac's recent Primary Mortgage Market Survey. In relation, average fixed mortgage rates dropped down to lows not seen since the summer.
According to Freddie Mac, the 30-year fixed rate mortgage averaged 4.13 percent for the week ending Oct. 24, a drop from last week's 4.28 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgage also decreased, now at 3.00 percent compared to last week's 3.07 percent.
"Mortgage rates slid this week as the partial government shutdown led to market speculation that the Federal Reserve will not alter its bond purchases this year," said Frank Nothaft, vice president and chief economist of Freddie Mac. "The weak employment report for September added to this expectation. The economy added just 148,000 jobs, which was below the market consensus forecast and less than the 193,000 jobs increase in August."
However, some experts believe that the decrease in residential financing rates is not impacted solely by the Fed's policies, according to CNBC. Instead, it is likely near the bottom of its range, meaning that other factors will have to contribute if rates are to drop any lower.