Mortgage rates dropped for the first time in five weeks as investors speculated that the Federal Reserve might delay tapering its bond buying program.
The average interest rate for the 30-year fixed-rate mortgage dropped this week to 4.51%, down from a two-year high of 4.58% last week, according to data released Thursday by Freddie Mac. The average rate for a 15-year FRM declined to 3.54%, down from last week’s average rate of 3.60% but still up year-over-year from last August’s 2.86%.
The 5-year Treasury-indexed adjustable rate mortgage, meanwhile, saw rates increase. The 5-year ARM rose to an average of 3.24%, up from last week’s 3.21%, according to Freddie Mac.
Frank Nothaft, vice president and chief economist for Freddie Mac, said market speculation about the timing of the Fed’s taper led to the decline in rates.
“The Fed is monitoring the housing market closely after the run up in mortgage rates over the past few months,” Nothaft said.“The 13.4 percent drop in new home sales in July led financial markets to speculate whether the Fed might delay reducing its bond purchases and allowed long-term bond yields and fixed mortgage rates to decline over the week.”