The average interest rate on the 30-year fixed-rate mortgage fell to a nine-week low this week following the Federal Reserve’s decision to maintain its $85bn-per-month bond-buying program.
The average rate for the 30-year FRM hit 4.32% this week, according to Freddie Mac’s Primary Mortgage Market Survey. That’s down from 4.50% last week, and the lowest average rate since the week of July 25. A year ago, the average rate was 3.40%.
The average rate for the 15-year FRM also fell, landing at 3.37% from last week’s 3.54%. Last year at this time, the average rate was 2.73%.
“These low rates should somewhat offset the house price gains seen the last number of months and keep housing affordability elevated,” said Frank Nothaft, vice president and chief economist for Freddie Mac. “For instance, the S&P/Case-Shiller® 20-city composite house price index rose 12.4 percent over the 12-months ending in July, which represented the largest annual increase since February 2006. In addition, more than half of the cities had annual growth exceeding 10 percent and four cities saw increases exceeding 20 percent.
“These increases in home values have also increased homeowner wealth,” Nothaft added.“For example, homeowners experienced an aggregate $1.4 trillion increase in equity in their homes over the first half of this year which contributed to the overall $4.2 trillion gain in household net worth.”
Adjustable-rate mortgages also fell this week. The 5-year Treasury-indexed hybrid ARM averaged 3.07% this week, down from last week’s 3.11%. The 1-year Treasury-indexed ARM landed at 2.63%, down slightly from last week’s 2.65%.