Average US 30-Year Mortgage Rate Edges Up to 3.87%

31 Dec 2014 | Author: | No comments yet »

Cheaper Oil is Driving Mortgage Rates Down.

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that while average fixed mortgage rates move slightly higher this week, the average 30-year fixed-rate mortgage ends the year below four percent.While falling oil prices naturally lead to cheaper gas costs, they’re also having a not-so-obvious impact on driving down mortgage rates, at least for the time being, according to The New York Times.

Looking at full-year data, the 30-year fixed-rate average for 2014 was 4.17%, the highest annual average since 2011,” said Frank Nothaft, vice president and chief economist with Freddie Mac. “Despite forecasts for increases in 2014, mortgage rates fell throughout the year, with the benchmark 30-year fixed mortgage rate ending 2014 under the 4% threshold, at 3.99%. Even with average home price appreciation of 5%, housing is more affordable now, with lower monthly payments on a larger loan than one year ago, by virtue of lower mortgage rates,” Bankrate said in its mortgage report. “Yet the housing market is sluggish as would-be homebuyers contend with stagnant incomes.

As the U.S. economy strengthens, the nation is appearing to be more of a “safe bet” for global investors, many of whom are seeking shelter in the U.S. Treasuries. “Investor demand is chasing that strong dollar into U.S. bonds, and those investors are requiring less yield,” said Redfin Chief Economist Nela Richardson. “And as investors require less yield to invest in those bonds, it also decreases mortgage rates.” While it is uncertain how long oil prices will help support low mortgage rates, sustained low-level energy prices could eventually cause a counter effect on interest rates as consumer spending increases, thus leading to rate gains if the economy continues to strengthen. Also, the Conference Board reported that confidence among consumers rose in December and the S&P/Case-Shiller® Seasonally-Adjusted National house price index rose 4.6 percent over the 12-months ending in October 2014.” Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets.

So it goes.” – Kurt Vonnegut, Slaughterhouse-Five Mortgage rates ended the year far better then they began it, really, though, that is skewed by the first few weeks of the year and the last few weeks of the year. Really, in a year in which the economy firmed, and the Fed pulled in the reins on its quantitative easing stimulus program, it’s sort of amazing that rates fell by nearly 70 basis points.

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