Mortgage Rates Fall to 20-Month Low, Freddie Mac Says

Fixed mortgage interest rates fell this week to their lowest level in more than 20 months, with Freddie Mac reporting that lenders were offering conventional 30-year loans at an average of 3.59 percent, down from 3.66 percent a week ago.

The average rate for a 15-year fixed home loan fell to 2.92 percent from 2.98 percent last week, Freddie Mac said in its weekly survey of lenders, issued Thursday. The starting rate also fell on hybrid loans that become adjustable after five years at a fixed rate.

Len Kiefer, deputy chief economist at Freddie Mac, said recent economic reports contained few signs that the economy was strong enough to trigger inflation and higher rates.

Pending home sales were weaker than expected, he said.

“Moreover, real (economic) growth for the fourth quarter was 2.6 percent and the Institute for Supply Management reported slower growth in manufacturing last month, both missing market consensus forecasts,” Kiefer said.

Not since Freddie Mac’s May 23, 2013 report has the average for a 30-year fixed home loan been below 3.6 percent.

Freddie Mac asks lenders early each week about the terms they are offering to solid borrowers seeking mortgages of up to $417,000 that conform to the guidelines of Freddie Mac and Fannie Mae, the nation’s major mortgage-financing companies.

The borrowers would have paid a little more than half of 1 percent of the loan balance in upfront lender fees and discount points to obtain the rates. Payments for such services as appraisals and title insurance are not included.

The survey provides a consistent gauge of mortgage trends, but actual rates adjust constantly and are influenced by many factors.

In addition to borrowers’ credit histories and debt loads, the factors include whether the borrowers opt for zero-cost loans at higher rates or pay extra to lenders initially to lower the rates.

This article appeared in print in the February 6th, 2015 edition of Hamodia.