Mortgage Interest Rate Report - February
Last Updated: 2/9/2014
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Long-term interest rates tumbled week after week in January as investors wavered in their economic confidence, according to mortgage finance company Freddie Mac.
The month started out with a small rate gain from the end of December. During the first week, the average rate on a 30-year fixed rate mortgage (FRM) rose to 4.53 percent, up from 4.48 percent the week before. The 15-year FRM carried an average rate of 3.55 percent, up from 3.52 percent while the one-year adjustable rate mortgage (ARM) was unchanged at 2.56 percent.
From there rates began their descent. The second week the 30-year FRM rate dipped to 4.51 percent, the 15-year FRM inched up to 3.56 percent the one-year ARM held steady at 2.56 percent.
The next week rates took a major dive. The average rate on a 30-year FRM sank to 4.41 percent and the rate on a 15-year FRM fell to 3.45 percent. The one-year ARM was unchanged at 2.56 percent for the fourth straight week. "Mortgage rates drifted downward this week amid signs of a weakening economic recovery. The economy added 74,000 jobs in December, less than the market consensus forecast,” said Freddie Mac vice president and chief economist Frank Nothaft in a statement.
In the fourth week, rates on 30-year FRMs slipped to an average of 4.39 percent and the 15-year FRM declined to 3.44 percent. The one-year ARM fell slightly to 2.54 percent.
Disappointing housing data led rates to fall in the last week. The 30-year FRM rate dropped to 4.32 percent and the 15-year FRM fell to 3.40 percent, while the one-year ARM averaged 2.55 percent. "Mortgage rates eased somewhat as new home sales fell 7 percent in December to a seasonally adjusted pace of 414,000 units, below the consensus,” commented Nothaft. “The S&P/Case-Shiller 20-city composite house price index declined 0.1 percent for the month of November, the first decrease since November 2012."
Investors are still trying to time the pace of the economy's recovery. Pair that with more uncertainty about how the Federal Reserve's tapering program is going to affect markets and there is plenty of room for interest rates to remain around their current lows in February.