Following a four-week period that saw mortgage rates gaining ground, the week that ended on March 24 saw that trend reverse. The average rate on a 30-year fixed mortgage dropped from 3.73 percent to 3.71 percent; a small decrease, but a decrease nonetheless. Rates were still above where they were last year, when the average for a 30-year fixed mortgage was 3.69 percent. This information comes from the most recent Primary Mortgage Markey Survey performed by Freddie Mac.
The rate for a 15-year fixed mortgage also declined a small amount, moving from the average 2.99 percent of the week before to its current 2.96 percent. This is 0.01 percent less than the end of March 2015 when the rate stood at 2.97 percent. Treasury-indexed hybrid adjustable mortgages also declined, with a five-year mortgage rate dropping from 2.93 percent to 2.89 percent. A year ago at this time, rates averaged 2.92 percent.
What caused these declines? According to Freddie Mac’s chief economist, Sean Becketti, there were two factors. The first was the Federal Reserve deciding that there was no need to change the Federal funds rate. This decision was announced early last week along with their new growth forecast that predicted reduced growth. These two announcements dropped 10-year Treasury bonds by three points, and that drop was felt throughout the mortgage industry. However, Becketti doesn’t believe this will last, going on to state that the Fed is still considering raising the rate in June.