Mortgage rates were mixed, the week ending Nov. 27, remaining flat or relatively unchanged as news surfaced that the Federal Reserve could keep the federal funds rate near zero longer than expected.
The 30-year conforming rate ranged from 3.09 percent to 5.38 percent for the week. A year ago, the rate was 4.24 percent.
The average rate for the 15-year fixed rate mortgage (FRM) was also unchanged at 2.86 percent, according to Erate.com, a financial information publisher and interest rate tracker since 1999.
The high and low 15-year FRM rates were 4.36 percent and 2.34 percent, respectively. A year ago, the rate averaged 3.54 percent.
Prolonging economic stimulus
During a Nov. 27 speech at the C.D. Howe Institute in Toronto, Canada, Charles Evans, president of the Federal Reserve Bank of Chicago, suggested the central bank should keep the federal funds rate near zero until unemployment falls to 6.5 percent, down from the previous 7 percent Federal Reserve plan.
The national unemployment rate in October was 7.5 percent, down from 8.5 percent a year earlier, according to the U.S. Labor Department’s Metropolitan Area Employment and Unemployment Summary, relased today.
The nation hasn’t seen a 6.5 percent jobless rate since 2008. If the Fed acts on Evans’ suggestion, mortgage interest rates could fall ever nearer an unprecedented 2 percent rate.
That’s because the Fed recently bumped up its mortgage-backed securities purchases, specifically to help keep mortgage interest rates low and spur the housing recovery.
Since then, mortgage interest rates have fallen from 3.74 percent to this week’s 3.54 percent, according to the Erate Interest Rate Update.
Housing, an economic cornerstone, is one of the fastest growing sectors of the economy and, when related purchases, ownership and operating costs are considered, housing accounts for 40 percent of the Consumer Price Index.
While other rates remained unchanged, the average interest rate for the 30-year jumbo loan dropped to 3.89 percent, for the week ending Nov. 27, down from 3.91 percent a week earlier. The rate was 4.82 percent a year ago. The spread ranged from 3.32 percent, at the low end, to 6.58 percent at the high end, both unchanged.
On the other hand, the average interest rate for the 5/1 adjustable rate mortgage (ARM) rose from 2.98 percent last week to an average 2.99 percent. The lowest 5/1 ARM rate this week was 2.45 percent and the high 4.10 percent, both also unchanged. The rate was 3.20 percent a year ago.
The average variable rate on home equity lines of credit (HELOC) remained unchanged for more than a month at 4.70 percent for the week ending Nov. 27, Erate.com reported. The rate averaged 4.73 percent a year ago. The lowest HELOC rate was 2.25 percent and the high, 8.75 percent, both also unchanged.
The average FRM rate on 15-year home equity loans dropped a couple of notches to 6.15 percent, down from 6.17 percent last week. Rates on 15-year home equity loans ranged from 2.50 percent to 9.95 percent, both unchanged. The average was 6.60 percent a year ago.
Erate’s National APR (annual percentage rates) numbers are tallied from the interest rates of some 200 mortgage originators nationwide.