Further Decrease in Mortgage Rates

mortgage-rates

The weekly report on mortgage rates produced by Freddie Mac indicates a small decline in the rates during the week ending June 20th. Despite the fluctuations, which occurred during the middle of the week due to the much awaited announcement on the Federal Reserve’s monetary policy, the rates are following a downward trend. Will it remain?

The average interest rate on a 30-year fixed mortgage went from 4.20% during the previous week to 4.17%. This decrease of 0.03% is significant given the mid-week increase due to the growing speculations over the Fed’s policy announcement. The rates on the other types of mortgage loans decreased as well.

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The average rate on a 15-year fixed mortgage is currently 3.30%. It went down by 0.01% from 3.31% during the previous week. The average rate on a 5-year adjustable mortgage is now 3.00%. It experienced a decline of 0.05%. The adjustable mortgages experienced the biggest drop in interest rates and there are indications that they may be more affordable in the short term, but in the long term they are expected to become much more expensive given the current trends in the financial markets.

Currently, the mortgage rates are still around their historic low. However, they are about 0.25% higher compared to the same time last year. This coincides with an annual decrease in the mortgage applications of 13%. The decrease in existing home sales is 7% while the drop in new home sales is 3% on an annual basis. The affordability of housing continues to decline despite the still low mortgage rates. It is determined primarily by the slower increase in incomes compared to the increase in home prices. Other negative factors include the low inventory and the tighter lending standards.

Major fluctuations in the mortgage rates are not expected in the short term. The Federal Reserve confirmed its plans to reduce the purchases of mortgage bonds. At the same time, the benchmark short-term rate will remain at its record low level.

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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