Drop in Fixed Mortgage Rates

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The rates on 30-year and 15-year fixed mortgages fell considerably during the week ending May 2nd. The decrease is attributed to the smaller than expected growth of the economy and the fast reaction in the mortgage bond market. This decrease in the rates favors potential home buyers who have been reluctant to make a move during the spring house buying season.

Currently, the average rate on a 30-year fixed mortgage is 4.29%, according to the latest survey of Freddie Mac. This is its lowest level in three months. The rate fell by 0.04 percentage points on a weekly basis. Still, it marked an increase of 0.94 percentage points on an annual basis. The drop in the average rate of 15-year fixed home loans was not that significant. The rate went 0.01 percentage points down and is currently 3.38%.

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The decrease in interest rates is primarily due to the smaller than expected increase in the gross domestic product during the first quarter of 2014. The increase of just 0.1% was well below expectations and this eased concerns about rising inflation. With inflation rates remaining steady, the mortgage rates experience no upward pressure. The expectations about the Employment Situation Report caused increased activity in the mortgage bond market and this also helped for the downward movement of the mortgage rates.

The big question is whether the downward trend in mortgage rates will remain. Many economists suggest that as the mortgage bond market continues to strengthen rates will drop further down, even though a major decrease is not expected. Others suggest that they will continue to fluctuate around the same level. However, currently there are no projections for the increase in the rate, at least in the coming weeks.

The improvement in the mortgage rates favors borrowers but they have to make one very important decision – to lock in the current lower rate or wait for a further decrease.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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