Mortgage Interest Rate Report - February
Last Updated: 2/17/2015
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Long-term mortgage interest rates pushed farther down toward year-long lows in January, according to data from mortgage finance company Freddie Mac, as foreign financial distress continued to weigh on the minds of investors.
During the first week of the new year, mortgage rates plummeted as domestic economic data reports were positive but foreign news was less encouraging. The average rate on a 30-year fixed rate mortgage (FRM) sank to 3.73 percent, excluding fees, down from 3.87 percent the week before. The rate on a 15-year FRM fell to 3.05 percent, from 3.15 percent and the one-year adjustable rate mortgage (ARM) slipped to an average rate of 2.39 percent from 2.40 percent.
“Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months,” commented Freddie Mac vice president and chief economist Frank Nothaft. “Meanwhile, the Fed minutes indicated ongoing discussion regarding the timing of the first rate hike. Of the few economic releases this week, ADP Research Institute reports the private sector added an estimated 241,000 jobs in December, which exceeded market expectations and followed an upward revision of 19,000 jobs in November.”
The next week rates fell in another avalanche, with the 30-year FRM rate crashing to 3.66 percent, the 15-year FRM falling to 2.98 percent and the one-year ARM declined to 2.37 percent.
The downward trend continued into the third week, as inflation slowed at home. The 30-year FRM rate decreased to 3.63 percent, the 15-year FRM rate plunged to 2.93 percent and the one-year ARM was static at 2.37 percent.
“Mortgage rates continued to fall, albeit at a slower pace…,” said Nothaft. “Housing starts picked up in December coming in at a seasonally adjusted 1.089 million unit pace and beating market expectations. Meanwhile, the drop in energy prices pushed the Producer Price Index down 0.3 percent for December and the Consumer Price Index fell 0.4 percent."
Rates made their only increase during the last week of the month. The average rate on the 30-year FRM rise to 3.66 percent, the 15-year FRM rate jumped to 2.98 percent and the one-year ARM inched up to 2.38 percent.
All the economic data coming from abroad has been pulling rates down and there is little on the horizon to make one think that much will change in the coming month. Greece continues to struggle with its debt issues and Russia’s economy is still hurting from plunging oil prices. Unless there is some significantly positive news on the home front, mortgage rates are likely to continue a slow decline through March.