Average rates for a 15-year fixed-rate mortgage hit a new low, while the 30-year rate returned to its record low, according to federal data released today. Find out more.
Borrowing rates for real estate investors have returned to record lows, following the announcement of a new round of economic stimulus from the Federal Reserve, according to a statement released today by Freddie Mac.
The average rate for a 15-year fixed-rate mortgage hit a new low of 2.77 percent, according to Freddie Mac, while the average rate for a 30-year fixed-rate mortgage returned to its all-time record low of 3.49 percent. A year ago, the 30-year fixed-rate mortgage averaged 4.09 percent, and the 15-year, fixed-rate mortgage averaged 3.29 percent.
“Following the Federal Reserve’s announcement of a new bond purchase plan, yields on mortgage-backed securities fell bringing average fixed mortgage rates to their all-time record lows which should aid the ongoing housing recovery, Frank Nothaft,” vice president and chief economist of Freddie Mac, said in a statement. Freddie Mac was created by Congress in 1970 to provide capital to mortgage lenders.
The Federal Reserve last week announced plans to purchase additional agency mortgage-backed securities at the rate of $40 billion a month. The Fed will also continue its program to extend the average maturity of its securities holdings through the end of the year, which, along with other measures, will increase the Fed’s holding of longer-term securities by about $85 billion per month through the end of the year. The result should reduce long-term interest rates, support mortgage markets and stimulate lending across broader financial markets, according to a Fed statement. As part of its efforts to increase employment while keeping inflation in check, the Fed plans to keep the federal funds rate below .25 percent through mid-2015.
Mortgage rates had begun inching up in August, according to Freddie Mac. The average rate for a 30-year, fixed-rate mortgage was 3.66 in the week ending August 23, while the average rate for a 15-year, fixed-rate mortgage was 2.89 percent.
The housing market showed other signs of improvement this week, with a 7.8 percent monthly increase in existing home sales and a 5.5 percent monthly increase in new home construction, according to Freddie Mac, but some housing industry analysts caution that the recovery is likely to be slow and faltering, constrained by high unemployment and tight credit conditions. The concern has many real estate investors sitting on the sideline.