Mortgage rates fell at the start of the year, with the 30-year, fixed rate averaging 3.95 percent, down from 3.99 percent the week prior, according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®). The 15-year, fixed rate is averaging 3.38 percent, down from 3.44 percent the week prior, while the five-year, Treasury-indexed, hybrid adjustable rate is averaging 3.45 percent, down from 3.47 percent the week prior.
“Treasury yields fell from a week ago, helping to drive mortgage rates down to start the year,” says Len Kiefer, deputy chief economist at Freddie Mac. According to Kiefer, the dip is in line with a longstanding trend.
“Despite increases in short-term interest rates, long-term interest rates remain subdued,” Kiefer says. “The 30-year mortgage rate is down a quarter of a percentage point from where it was a year ago and the spread between the 30-year fixed and 5/1 adjustable rate mortgage is the lowest since 2009.”
Changes could be on the horizon, however.
“With the minutes showing continued support for gradual increases in policy rates from many participants and inflation rates remaining low, there isn’t much upward pressure on long-term rates at the moment,” says Kiefer. “Whether that changes due to a tighter labor market and the economic impact of tax reform remains to be seen.”
In December, the Federal Reserve announced its intent to raise the key interest rate, which can affect the cost of a mortgage, three times in 2018.
Source: Freddie Mac
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