Mortgage rates fall for the week of October 28, 2013

Posted by  on Nov 04, 2013

The Federal Reserve opted to delay the wind-down of buying bonds because of continued weakness in the U.S. economy, and weak economic reports last week support that decision. For now, the tapering of purchases of mortgage-backed securities by the Fed has been put on hold. Mortgage rates dipped again a little last week.

Mortgage rates react to economic reality

According to HSH.com, last week the overall average rate for a 30-year fixed-rate home loan declined by five basis points (0.5 percent) to 4.27 percent, once again the lowest mortgage rate since the third week in June. Average rates for 15-year fixed-rate mortgage loans fell by four basis points (0.04 percent) to 3.44 percent. Rates for FHA-insured, 30-year fixed-rate home loans also declined by two basis points (0.02 percent) to an average rate of 3.91 percent. The average rate for a 5/1 Hybrid Adjustable Rate Mortgage (ARM), also declined by four basis points (0.04 percent) to an average rate of 3.02 percent. Compare mortgage rates for your area before refinancing or applying for a purchase loan.

Economic news stifling growth

Economic data reported last week shows that inflation is not much of a concern in the Producer Price Index or the Consumer Price Index, both well below the two percent threshold that the Fed has identified as the rate when further policy changes will need to be made. The Fed's statement last week left open the possibility of a change in policy in December, but it's possible that the decision to taper bond-buying will wait until 2014.

Consumer spending has slowed since June and even auto sales, which improved in the summer, slowed in October. Consumer confidence has also declined in the past month or so.

The mortgage experts at HSH.com anticipate that mortgage rates won't change dramatically this week, but the direction they go will depend on the results of a number of important releases this week of economic data.

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