A winter slump in the U.S. housing market has led long-term mortgage interest rates down a month-long slide, bringing them to an almost three-month low this past week, according to data from Freddie Mac.
The average rate on a 30-year fixed rate mortgage plummeted to 4.23 percent, excluding fees during the week ended February 7, down from 4.32 percent during the previous week. Rates have been on a steady downward slide since the beginning of the year when rates started more than a quarter percent higher at 4.53 percent. The new rate is still up significantly from a year ago, however, when the average was 3.53 percent.
Rates on 15-year fixed rate mortgages also fell, dropping to 3.33 percent from 3.40 percent the week before. Last year, the average rate was 2.77 percent.
Even adjustable rate mortgages fell in the latest week, with the average rate on a one-year ARM slipping to 2.51 percent from 2.55 percent. The rate has barely changed from last year when it was 2.53 percent.
Freddie Mac attributes the downward rate pressure to recent weak housing reports. “The pending home sales index fell 8.7 percent in December to its lowest level since October 2011,” commented Freddie Mac vice president and CEO Frank Nothaft in a statement. “Fixed residential investment negatively contributed to GDP in the fourth quarter for the first time since the third quarter of 2010.”
Recent data from real estate data company CoreLogic also showed that home prices fell again in December for the third straight month. Yet notwithstanding the last five weeks of interest rate decreases, economists are still predicting that home sales and prices will rise in 2014, although at a much more modest pace than in 2013.