Long-term mortgage interest rates
took a tumble in the latest week, falling to a six-month low and setting a new record low for this year, according to data from mortgage giant Freddie Mac.
The average rate on a 30-year fixed-rate, conventional mortgage sank to 4.21 percent in the week ended May 8, 2014, excluding points, down from 4.29 percent last week. The last time 30-year rates were so low was six months ago during the week of November 7, 2013.
The 15-year fixed-rate loan carried an average rate of 3.32 percent, a seven-week low, down from 3.38 percent the week before. The one-year adjustable rate mortgage
fell to an average of 2.43 percent, down from 2.45 percent.
“Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter,” reported Freddie Mac vice president and chief economist Frank Nothaft in a statement
. Slow growth in the Chinese economy as well as the unrest in Ukraine also contributed to the flight toward bonds and the downward pressure on mortgage rates.
This year’s less-than-stellar economic growth has caused Nothaft to revise his forecast for interest rates in 2014. At a recent U.S. Chamber of Commerce event, he said that rate will “just gradually rise, very slowly” ending the year between 4.6 percent and 4.7 percent. That’s down from his prediction in January that rates would climb to 5.1 percent by year end.
Even though interest rates may not be rising as fast as previously expected, they are still significantly higher than last year when the 30-year fixed-rate mortgage averaged 3.42 percent during the same week. And Nothaft is confident that rates will continue to widen that gap. “I do think economic growth will pick up…and that the Fed will continue to taper,” he said. “That will gradually put some upward pressure on mortgage rates.”
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