Real Estate News
Mortgage Rates Drop for 4th Straight Week
US mortgage insurer Freddie Mac reported Thursday that mortgage rates fell for a fourth consecutive week, alleviating fears that declining affordability will fuel another housing crash in the coming months. According to the report, the average rate for a 30-year fixed-rate mortgage was 4.14 percent this week, down from last week's average of 4.20 percent. The average for the 15-year fixed mortgage, meanwhile, slipped from 3.29 to 3.25 percent. The report comes on the heels of another positive indicator for the housing sector, as the Commerce Department reported that new home construction reached a five month high in April.
Over the last few months, home sales have been disappointing as higher interest rates and rising property values have steadily increased the price of home ownership. As a result, affordability is now near historically low levels in many markets across the country. Springtime normally brings with it a substantial uptick in home sales as the weather warms up and parents look to wrap up moves before school season starts up again in the fall. The 2014 season was slow to get rolling, however, because extreme winter weather events delayed home shopping for those in markets on the East Coast. Continued declines in interest rates could help balance the impact of rising prices and allow lower income Americans to consider buying rather than renting.
Despite the recent downward movement in mortgage rates, the average is still nearly a full percentage point above record lows set last spring. Fixed-rate mortgages weren't the only home loan types to get cheaper last week, as rates slipped for adjustable-rate mortgages, or ARMs, as well. The average interest rate for a five year ARM fell from 3.01 percent to 2.96 percent, while the average rate for a 1-year ARM was unchanged at 2.43 percent.