After surging to 5.20% four weeks ago, the 30-year average mortgage rate has drifted down. Today's average rate is 5.06% versus 5.11% last week according to BestCashCow/Informa data. The end of the Fed's MBS buying program has been met by a shrug of indifference by the market. Part of the drop is also due to the decline in Treasury bond yields, which hit a six week low today. 10-year Treasury bonds are used to set 30-year mortgages. With no inflation in sight and Europe looking like it's going to fall to pieces, it's not unreasonable to expect we might see rates below 5% soon. A large increase to the 5.50% range looks unlikely at the moment.
What Does This Mean for Homebuyers?
I've been following actual rates, not just averages for a 30-year fixed rate loan in Massachusetts for the past four months. Until three weeks ago, a homebuyer could get a $200,000 loan at 0 points for 4.5%. Three weeks ago, the rate shot up to 5.125%. This week it's at 4.875%.
Other Mortgage Rates
Other rates varied slightly. The average 15-year fixed rate mortgage dropped slightly from 4.45% to 4.42%, up from a low of 4.34% in March. As the chart shows, the 5-year ARM has dropped significantly in recent weeks from 4.03% to 3.82% this week. The 1-year ARM, one of the most volatile swung wildly this week moving from 4.87% to 4.15%.
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