Fixed Mortgage Rates are lower than the Previous Year

Fixed Mortgage Rates

Good news for US housing industry. Data released by Freddie Mac shows fixed mortgage rates are lower for the first time in 12 months. A week ago, 30 years fixed rate average was 4.17%. Today, it comes down to 4.14% with an average of 0.5 points from previous year’s 4.46%.

Interestingly, mortgage rate was 4.12% at the end of last month. So the rate is definitely not at its lowest point in this year. However, it’s the first time since June 2013 that 30 years fixed rate is below from what it was a year ago. A year back, mortgage rates rose above 4 percent because of Federal Reserve’s decision to attenuate its bond-buying program. The rise above 4 percent happened last time in 2011.

In the housing market, there are two types of customers. The first type of customers looks for standard and long-term loan. For them, the interest rate for 30 years fixed rate home loan would be 4.125%. The annual percentage rate would be 4.15. The second type of customers is those, who look for mortgage option and want shorter and inexpensive home loans. Banks offer them 15 year fixed rate mortgage plans at an interest rate of 3.25%. The annual percentage rate yield would be 3.31%.

It should be mentioned that 30 years the fixed rate has come down 38 basis points since January and 15 years the fixed rate has come down 33 basis points since the same time period. Frank Not-haft, the vice president of Freddie Mac said, “Mortgage rates were down following the release of first quarter real GDP final estimate, which fell at a 2.9 percent annualized rate, a steeper than expected decline and the worst reading since the first quarter of 2009.”

Hybrid adjustable rate mortgages too fell headlong. Five years ARM average fell to 2.98% with an average 0.3 point. A week back, the ARM average was 3% and a year ago it was 3.08%. Henceforth, this is the fourth time in this year when five year ARM rate is less than 3%.

As for the one year ARM average, the rate has slumped to 2.4% with an average 0.4 point. A week back, the rate was 2.41%.