Lenders adhere firmly to mortgage rates after dispute resolution with the Federal Reserve

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Mortgage lenders again kept rates virtually unchanged after it became known last week that efforts by the central bank to bolster the economy could begin to contract by the end of the year.

According to Freddie Mac’s weekly lender poll, 30-year mortgage rates rose by one base point, the second consecutive week of minimal change.

“The tug of war between the economic recovery and the rise in COVID-19 cases has caused mortgage rates to move sideways in the past few weeks,” said Sam Hather, chief economist at Freddie Mac. statement… “In general, rates remain low, opening a window of opportunity for those who have not refinanced rates below three percent. From a homebuyer’s perspective, demand for bids is on the rise, but the main obstacle to increasing home sales remains the very low level of inventory that can be purchased by consumers. ”

For the week ending August 26, Freddie Mac’s Weekly Mortgage Market Survey revealed average rates for the following loan types:

  • For 30-year fixed-rate mortgages, rates averaged 2.87 percent with an average of 0.6 points, slightly higher than 2.86 percent last week and slightly lower than 2.91 percent a year ago … According to 1971 records, rates on 30-year loans hit an all-time low of 2.65 percent for the week ending January 7, 2021.
  • Rates on 15-year fixed-rate mortgages averaged 2.17 percent with an average of 0.6 points, up from 2.16 percent last week and down from 2.46 percent a year ago. According to 1991 records, the rate on 15-year fixed-rate mortgages was close to the all-time low of 2.10 percent set in the week ending August 5, 2021.
  • For Treasury-indexed five-year adjustable rate (ARM) hybrid mortgages, rates averaged 2.42 percent with an average of 0.2 points, up from 2.43 percent last week and 2.91 percent a year earlier. ARM’s 5-year loan rates are still close to their lowest level since at least 2005, staying just above their lowest point of 2.40 percent for the week ending August 5, 2021.

Freddie Mac’s Weekly Survey averages reflect loans to borrowers with excellent credit who have invested 20 percent in the value of their home. Borrowers with lower credit ratings can expect higher interest rates on purchase loans.

Rates declined from February to March, when fears of inflation led to a temporary hike for borrowers. Since then, however, rates on 30-year loans have remained at around 3 percent or below.

The Federal Reserve was purchase of bonds and mortgage-backed securities throughout the pandemic, this measure helped to keep interest rates low.

Minutes released last week from July 27-28 meeting of the Federal Reserve Board, which determines monetary policy, showed that the majority of members are ready to reduce the purchases of bonds that the Fed is making to stimulate the economy by the end of this year.

Fed Chairman Jerome Powell is expected to provide more information on the prospects for the narrowing when he presents his views on the economic outlook at the Economic Policy Symposium in Jackson Hole, Wyoming on Friday.

Write to Daniel Houston



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