The first mortgage rates of the New Year came in mixed, reflecting continued economic uncertainty as the U.S. Congress averted the fiscal cliff, but kicked the deficit can down the road.
Freddie Mac’s weekly Primary Mortgage Market Survey reported the average rate on the 30-year fixed-rate mortgage (FRM) came in at 3.34 percent, with an average 0.7 point, the week ending Jan. 3.
The rate was down, but not significantly, from 3.35 percent last week. A year ago, it averaged 3.91 percent.
Rise of the ARMs
Interest rates rose on both benchmark adjustable rate mortgages (ARMs), Freddie Mac reported, after Congress passed a fiscal cliff bill that left a host of tax shelters and mortgage relief provisions in place.
The fiscal cliff bill did save the capital gains tax exclusion on home sales, it extended the mortgage debt forgiveness tax exemption and it revived the mortgage insurance tax deduction, among other saved provisions real estate consumers want.
However, trickling down to mortgage rates, economic uncertainty remains over the nation’s nearly $16.5 trillion debt and its deficit spending, which Congress must address in the next two months – if it doesn’t revert to more can kicking.
For the 5-year Treasury-indexed hybrid adjustable rate mortgage (ARM), the average interest rate was 2.71 percent, with an average 0.6 point, for the week ending Jan. 3, up from last week’s 2.70 percent average and up from the average 2.86 percent a year ago.
Finally, for the week ending Jan. 3, Freddie Mac reported the 1-year Treasury-indexed ARM averaged 2.57 percent, with an average 0.4 point, up from 2.56 percent last week, but down from 2.80 percent a year ago.