Federal Reserve Chairman Ben Bernanke told Congress last week that the Fed is keeping an eye on the impact of higher mortgage rates on the housing recovery. Bernanke said, "If we think the mortgage rate increases are thwarting the progress we will have to take additional action."
Over the next few weeks, housing market reports will be released that include the impact of higher mortgage rates.
Mortgage rates refuse to rise
According to HSH.com, last week the overall average rate for a 30-year fixed-rate home loan dropped by 10 basis points (0.10 percent) to 4.60 percent. Average rates for 15-year fixed-rate mortgage loans fell by 9 basis points (0.09 percent) to 3.68 percent. FHA-insured, 30-year fixed-rate home loan rates declined by 16 basis points (0.16 percent) to an average rate of 4.22 percent. The average rate for a 5/1 Hybrid Adjustable Rate Mortgage (ARM), also increased last week, dropped 12 basis points (0.12 percent) to an average rate of 3.35 percent. Compare mortgage rates for your area before refinancing or applying for a purchase loan.
Economic news trickles in
Last week, two reports indicated a potential impact of rising mortgage rates on the housing market: housing starts declined by almost 10 percent in June, although the biggest impact there was a drop in multifamily building rather than single family homes. The second report, from the Mortgage Bankers Association, showed that mortgage applications dropped to a two-year low, with even purchase applications slowing.
The Fed's recent survey of regional economic conditions showed "modest-to-moderate" economic growth. But this week's reports include new and existing home sales and the Chicago Fed's National Activity Index and Consumer Sentiment. All of this leads the mortgage experts at HSH.com to anticipate that mortgage rates will fall slightly again this week by a few basis points.
Our live database of current mortgage rates can help you find the best mortgage rates in your area.