The Home Buyer's Korner

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January 29th, 2015

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Average Mortgage Rates for January 29th, 2015

rates

Mortgage interest rates rose this week for the first time in 2015, with Freddie Mac’s widely watched survey pegging the 30-year conventional rate at 3.66 percent, up from 3.63 percent last week. The average rate for a 15-year fixed home loan was 2.98 percent, up from 2.93 percent. Start rates for adjustable loans rose as well, Freddie Mac said Thursday. The average one year adjustable rate mortgage rose one base point to 2.38 percent from last week’s rate of 2.37 percent and the average rate for a 5/1 adjustable rate mortgage rose to 2.86 percent from last week’s rate of 2.83 percent.

Discount points remained at 0.60 for 30-year fixed rate mortgages, 0.50 for 15-year fixed rate mortgages and the discount point of 0.50 percent for 5/1 adjustable rate mortgages, but dropped to 0.40 percent from 0.50 percent on one year adjustable rate mortgages.

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Last December rates began falling and fell under 4 percent after an 18 month string where a 30-year conventional mortgage had been 4 percent or higher. Low rates have been triggered by global demand for safe securities as we’ve have seen economies outside the U.S. slow down and some fall into recession. That’s pushed down the yields on the 10 year U.S. Treasury Bill, which most mortgages in the U.S. is tied too.

Freddie Mac asks lenders each Monday through Wednesday about the terms they are offering on mortgages of up to $417,000 that can be backed by Freddie and Fannie Mae and jointly guarantee about 60 percent of U.S. home loans.

The borrowers in Freddie Mac’s survey are assumed to have 20 percent down payments and to pay about half of 1 percent of the loan amount in upfront lender fees and discount points. Payments for such services as appraisals and title insurance are not included.

The Federal Reserve maintained its pledge to be patient on raising interest rates and boosted its assessment of the economy and labor market, even as it expects inflation to decline further.

U.S. economic activity has been expanding at a solid pace, the Federal Open Market Committee (FOMC) said in its statement this week. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. Policy makers said inflation is anticipated to decline further in the near term, adding that price gains are likely to rise gradually toward 2 percent over the medium term as transitory effects of low energy prices dissipate. Fed officials are confronting divergent economic forces as they weigh the timing of the first interest-rate increase since 2006.

Strong job gains argue for tightening sooner, while inflation held down by a plunge in oil prices and a cooling global economy provides grounds for delay.

The Fed acknowledge global risks, saying that it will take into account readings on international developments, as it decides how long to keep rates low.

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