Mortgage Interest Rate Report - January
Last Updated: 1/19/2015
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Mortgage Rates News & Analysis
Long-term mortgage interest rates made dramatic drops in December as domestic and foreign economic news pushed investors to the safety of bonds, according to data from mortgage finance company Freddie Mac.
Rates tumbled in the first week of the month, as reports at home did little to boost market confidence. The average on a 30-year fixed rate mortgage (FRM), excluding fees sank to 3.89 percent, down from 3.97 percent the week before. The 15-year FRM carried an average rate of 3.10 percent, down from 3.17 percent and the one-year adjustable rate mortgage (ARM) average fell to 2.41 percent from 2.44 percent.
"Mortgage rates were down across the board on a week of underwhelming economic releases,” commented Freddie Mac vice president and chief economist Frank Nothaft. “New home sales missed consensus expectations by selling at an annual pace of 458,000 units in October and the National Association of Realtors reported that pending home sales dipped in October by 1.1 percent. The ADP's estimate for payroll growth [PDF] in November was 208,000 jobs, under expectations of 225,000."
The next week rebounded a bit with the 30-year FRM rate rising to 3.93 percent and the 15-year FRM rate growing to 3.20 percent. The one-year ARM rate slipped however to 2.40 percent.
Rates plunged downward again in the middle of the month. “The 30-year fixed mortgage rate dropped to its lowest point of 2014 this week,” said Nothaft.” Mortgage rates fell along with 10-year Treasury yields, which closed at their lowest level since May 2013.” Lackluster domestic housing data was to blame as well as the economic chaos in Russia.
The 30-year FRM average dropped to 3.80 percent, the 15-year FRM rate fell to 3.09 percent and the one-year ARM declined to 2.38 percent.
The week before Christmas brought slightly higher rates. The average rate on the 30-year FRM rose to 3.83 percent. The 15-year FRM average inched up to 3.10 percent and the one-year ARM rate tiptoed back to 2.39 percent.
The last week of 2014 brought slightly higher rates again, but they still finished the year much lower than they started. The average rate on a 30-year FRM grew to 3.87 percent, the 15-year FRM rate rose to 3.15 percent and the one-year ARM rate increased to 2.40 percent.
As the trouble in European economies heavily influenced the downward trend in rates last month, and there have been no substantial improvements in Russia or elsewhere, it is likely mortgage rates will remain low in January, rising or falling incrementally based on the movement of domestic economic data.