After months of speculation about when the Federal Reserve would begin to pull back on their Quantitative Easing program and predictions that September would be the month when the Fed would make a move, the Fed decided to continue buying $85 billion of mortgage-backed securities and Treasury bonds per month. The weak economy indicated by this decision led mortgage rates to decline last week.
Mortgage rates stumble
According to HSH.com, last week the overall average rate for a 30-year fixed-rate home loan dropped by 11 basis points (0.11 percent) to 4.65 percent. Average rates for 15-year fixed-rate mortgage loans declined by nine basis points (0.09 percent) to 3.74 percent. The FHA-insured, 30-year fixed-rate home loan dropped even more, declining 15 basis points (0.15 percent) to an average rate of 4.27 percent. The average rate for a 5/1 Hybrid Adjustable Rate Mortgage (ARM), also declined by nine basis points (0.09 percent) to an average rate of 3.38 percent. Compare mortgage rates for your area before refinancing or applying for a purchase loan.
Economic news remains weak
The Federal Reserve stated that more economic progress needs to be established before reducing its bond-buying activity, but last week's economic news was the usually mixed-bag. New home sales declined in July, likely at least in part as a result of higher home prices and higher mortgage rates, but housing starts for single family homes rose at the strongest pace since February 2013.
The Leading Economic Indicators show that the economy should be improving in the coming months, but unfortunately job growth statistics aren't showing enough growth for everyone to feel confident that a solid recovery is underway.
The mortgage experts at HSH.com anticipate that mortgage rates will decline again this week depending on new economic data and that rates will rise again closer to the next Fed meeting at the end of October.
Our live database of current mortgage rates can help you find the best mortgage rates in your area.