Fresh uncertainty about the economy investors to buy up more bonds, pushing long-term mortgage interest rates lower this week, according to new data from Freddie Mac.
The average rate on a 30-year fixed rate mortgage plunged to a seven-week low of 4.41 percent, excluding fees, during the week ended January 16, down from 4.51 percent the week before. The current rate is still much higher than a year ago when it was near record lows at 3.38 percent.
The 15-year fixed rate mortgage also dropped significantly, falling to 3.45 percent from 3.56 percent the previous week. During the same week of 2013, the average rate was just 2.66 percent.
The one-year adjustable rate mortgage was unchanged from last week however, at 2.56 percent. The rate has also only barely changed from last year at this time when it was 2.57 percent.
“Mortgage rates drifted downward this week amid signs of a weakening economic recovery,” said Freddie Mac vice president and chief economist Frank Nothaft in a statement. “The economy added 74,000 jobs in December, less than the market consensus forecast. Retail sales rose 0.2 percent in December, which was nearly half of November’s 0.4 percent increase. Meanwhile, the unemployment rate fell to 6.7 percent which was the lowest since October 2008.”
Other reports show that many economists had predicted a December job increase of twice what actually occurred and that the unemployment rate fell mostly due to the number of people who had given up looking for work.
Still, the overall forecast for the year calls for improvements in the jobs market and housing scene. The Federal Reserve has already expressed enough confidence in the economy to announce a tapering of its stimulus program. Rates are probably at their lowest point for the coming year and will likely rise to around 5 percent by the end of the year.