February 7th, 2014 11:52 AM by Ron Mastrodonato
The average interest rate for 30-year fixed mortgages, which surpassed the 4.51 percent threshold in the first week of January, dropped for the second consecutive week to 4.41 percent, according to the latest survey from mortgage buyer Freddie Mac.
That average rate, 0.1 percent below what it was last week, is the lowest it has been since the second week of December, when the average was at 4.42 percent. A year ago the average interest rate on a 30-year fixed-rate loan was 3.38 percent.
Following a marginal gain last week, the average rate on a 15-year fixed-rate mortgage also fell. It currently stands at 3.45 percent, down 0.11 percentage point from last week’s 3.56 percent. At this time last year, the 15-year fixed-rate average was at 2.66 percent.
Averages for hybrid adjustable-rate mortgages were mixed. The five-year ARM fell to 3.10 percent, down 0.05 percentage point from last week’s 3.15 percent. The one-year ARM held steady at 2.56 percent for the fourth consecutive week.
Frank Nothaft, vice president and chief economist for Freddie Mac, pointed to weak economic data as the main culprit behind the drop in averages.
“Mortgage rates drifted downward this week amid signs of a weakening economic recovery,” Nothaft said in a statement. “The economy added 74,000 jobs in December, less than the market consensus forecast. Retail sales rose 0.2 percent in December, which was nearly half of November’s 0.4 percent increase. Meanwhile, the unemployment rate fell to 6.7 percent, which was the lowest since October 2008.”
Mortgage rates had been rising steadily in December after the Federal Reserve announced it would begin to taper its bond-buying stimulus program in January. The program has helped offset dramatic gains in real estate prices and kept affordability elevated while the market has stabilized.
While home sales have slowed since the Fed’s announcement, the housing market continues to show signs of recovery, and key rates are expected to see a significant rise. In the short-term, however, rates are expected to remain relatively level.
In the latest Mortgage Rate Trend Index by Bankrate.com, loan experts were split on whether rates would rise or remain unchanged over the next week.
“Rates might edge up a bit after dropping for two weeks in a row, but I don’t expect anything major until the next Fed meeting in two weeks,” said Polyana da Costa, senior mortgage reporter for Bankrate.com.