Freddie Mac: New economic data results in mortgage rate dip
Posted on Thursday, November 21, 2013 at 10:17:03 AM
The recent increases for residential financing rates have reversed course, amid new economic data and lower inflation rates, according to Freddie Mac's Primary Mortgage Market Survey.
For the week ending Nov. 21, the 30-year fixed-rate mortgage averaged only 4.22 percent, compared to last week's 4.35 percent, Freddie Mac reported. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.95 percent this week.
"Fixed mortgage rates fell this week on reports of weaker manufacturing growth and declines in overall inflation rates," said Frank Nothaft, vice president and chief economist for Freddie Mac. "Industrial production slipped by 0.1 percent in October, below the market consensus forecast of a 0.2 percent gain. The consumer price index also unexpectedly fell during the month. On an annual basis, consumer prices are up 1 percent, the smallest increase since October 2009."
In the past, higher inflation rates have wreaked havoc on residential financing, according to Yahoo Finance. For example, the early '80s saw rates average close to 17 percent. This high figure was attributed to the Federal Reserve's attempt to temper inflation by boosting rates.
Therefore, today's economic data and lower inflation mean that mortgage rates are headed down, not up.