Mortgage Rates End July Where They Started

The average rate on long-term U.S. mortgage loans at the end of July fell back to its original level from the beginning of the month, according to mortgage finance giant Freddie Mac, but rates could start to pick up next week.

The 30-year conventional fixed-rate mortgage carried an average rate of 4.12 percent, excluding points, during the week ended July 31, down slightly from 4.13 percent the previous week. The rates is lower than last year’s 4.39 percent. Rates made little movement overall during July, only inching up to 4.15 percent in the second week, but still remaining very near their yearly lows.

The 15-year fixed-rate mortgage fell to 3.23 percent from 3.26 percent the week before and the one-year adjustable rate mortgage dipped to 2.38 percent from 2.39 percent.

Mortgage interest rates have declined since January, when the 30-year started the year at 4.53 percent. Even though the Federal Reserve has begun tapering its stimulus program, rates have not seen much upward pressure at all. The Fed announced Wednesday that it does not yet want to raise its own target interest rate because of economic concerns but they planned to continue to cut back on their mortgage bond purchases. Going from $35 billion a month to $25 billion now.

Wednesday also brought some news however, that might finally push home loan rates up. GDP jumped to an annualized rate of 4.0 percent in the second quarter, well above market expectations. That kind of unanticipated growth could encourage investors to venture out more, decreasing the demand for Treasury bonds and pushing mortgage rates higher.

Still, it is unlikely that rates will grow at breakneck speed. Most economists are still predicting that rates will barely reach 5 percent by the end of the year, maintaining a high level of affordability for home buyers.

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