Fixed mortgage rates moved to record lows this week on the heels of the Federal Reserve’s efforts to keep rates low until 2015.
The average rate on the 30-year fixed-rate mortgage (FRM) fell considerably to 3.40 percent the week ending Sept. 27, down from 3.49 percent last week and 4.01 percent a year ago, according to Freddie Mac’s Primary Mortgage Market Survey
The average rate on the 15-year FRM likewise fell to a new record low, 2.73 percent, with an average 0.6 point, down from 2.77 percent last week and 3.28 percent last year.
Two weeks ago, the Federal Reserve added an $40 billion to its $45 billion monthly mortgage-backed securities purchases in an effort to keep mortgage interest rates low for the next several years.
“Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market. For instance, the S&P/Case-Shiller 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010,” said Frank Nothaft, vice president and chief economist of Freddie Mac.
The average interest rate on 5-year Treasury-indexed, hybrid adjustable rate mortgages (ARMs) was 2.71 percent this week, with an average 0.6 point. Last week, it averaged 2.76 percent. The 5-year ARM averaged 3.02 percent a year ago.
Finally, for the week ending Sept. 27, Freddie Mac reported the 1-year Treasury-indexed ARM averaged 2.60 percent, with an average 0.4 point, down from 2.61 last week, and down from 2.83 percent a year ago.