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Mortgage rates continue to stagnate before Fed details slow down

Mortgage rates kept their streak of stability alive for the seventh straight week without deviating from a 2 basis point range, according to Freddie Mac’s latest lender survey.

Average 30-year mortgage interest rates rose to 2.88 percent this week before Federal Reserve Chairman Jerome Powell said Wednesday that the central bank could start tightening its fiscal stimulus as early as November this year.

“The slowdown in economic growth around the world has caused a flight to the quality of US financial markets,” Freddie Mac chief economist Sam Khater said in a statement. “This has resulted in an increase in US Treasury bond purchases by foreign investors, which has resulted in mortgage rates remaining unchanged despite the increasing dispersion of inflation across consumer goods and services.”

For the week ending September 23, Freddie Mac’s weekly Primary Mortgage Market Survey reported average interest rates on the following types of loans:

  • To the 30-year fixed-rate mortgagesInterest rates averaged 2.88 percent with an average of 0.7 points, compared to 2.86 percent in the previous week and close to the 2.90 percent mark a year ago. Interest rates on 30-year loans hit an all-time low of 2.65 percent in the week ending January 7, 2021, according to 1971 records.
  • Prices on 15-year fixed-rate mortgages an average of 2.15 percent with an average of 0.6 point, an increase of 2.12 percent in the previous week and a decrease of 2.40 percent a year ago. The mark continued to raise the interest rate on those 15-year loans from their all-time low of 2.10 percent for the week through August 5, 2021, according to records from 1991.
  • To the 5-year hybrid Treasury indexed floating rate mortgage (ARM) loan interest rates averaged 2.43 percent, averaging 0.3 points, down from 2.51 percent last week and a 2.90 percent decrease a year ago. 5-year ARM loan rates are now just above the record low of 2.40 percent set in the week ended August 5, 2021.

The survey tracks average interest rates for borrowers with excellent credit who have given up a home 20 percent, according to Freddie Mac’s survey methodology. Borrowers with poorer credit ratings can expect higher interest rates.

The recent stability in 30 year loan interest rates is unlike anything the market has seen since the pandemic began. The last seven weekly averages of 30-year mortgage rates were 2.87, 2.86, 2.87, 2.87, 2.88, 2.86 and 2.88, respectively.

The Federal Reserve has made it clear that it wants to continue the fiscal stimulus by sticking to a low target rate. However, she plans to reduce the number of bonds and mortgage-backed securities she buys each month.

This approach shows the central bank remains optimistic about the prospects for the US economy to recover from the coronavirus pandemic, Realtor.com’s manager of economic research George Ratiu said in a statement.

“Markets are likely to price in the expected taper as signs of a timeline emerge, meaning the days with mortgage rates below 3 percent could be in the rearview mirror by the end of 2021,” Ratiu said.

Email to Daniel Houston

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