After a monthlong rise, mortgage rates are once again on the decline.
The average rate on a 30-year fixed loan dropped slightly, settling at 3.93 percent after nearing 4 percent a week ago, according to the latest survey by mortgage buyer Freddie Mac. After nearing record lows, rates increased dramatically over the last month due to speculation that the Federal Reserve will reduce its bond purchases.
The average rate on a 15-year fixed mortgage fell to 3.04 percent from 3.1 percent a week ago, which was the highest average for a 15-year fixed loan in more than a year. The average rate on a 15-year fixed loan previously achieved a historic low in early May when it dipped to 2.56 percent.
In a sign that the real estate market and the economy at large continue to strengthen, the National Association of Realtors announced today that sales of previously owned homes jumped 4.2 percent last month. However, mortgage expert Al Bowman expects the strengthening sector will cause mortgage rates to rise:
“This was a bigger increase in sales than was expected, pointing towards a strengthening housing sector. Since a strengthening housing sector means broader economic growth is more likely, we should consider the data negative for mortgage rates.”
The average rate on a one-year adjustable-rate mortgage fell to 2.57 percent, down from 2.58 percent a week ago. Additionally, the average on a five-year hybrid loan stayed static at 2.79 percent. The fee for a one-year adjustable remained steady at 0.4 point, while the fee for five-year fell from 0.6 point to 0.5.
Looking ahead, experts are split on whether rates will remain relatively the same or will trend upward. In the latest Mortgage Rate Trend Index by Bankrate.com, 40 percent of those polled believe rates will rise, while 40 percent said rates will remain unchanged. “Volatility is rising as the bond market comes to grips with the fact the Federal Reserve is taking away the punch bowl,” says Mike Larson, interest rate and real estate analyst for MoneyandMarkets.com. “Look for rates to normalize — or, in plain English, rise.”
Realtor.com | Real Estate News | Jun 20, 2013 | By: Neal J. Leitereg