Mortgage Rates Fall Slightly in Past Week

U.S. home loan rates fell slightly in the last week, prompted in large part by employment news halting a recent upward trend, according to Freddie Mac.

The benchmark 30-year fixed-rate mortgage average fell to 6.28 percent from 6.34 percent, Freddie Mac said, citing results of its weekly primary market survey. Last year at this time, the 30-year fixed-rate mortgage loan averaged 6.24 percent.

The agency said its weekly survey showed the 15-year loan, a product used by many as a mortgage refinance option, also declined in the past week to 6.02 percent from 6.06 percent. A year ago, the 15-year mortgage loan averaged 5.83 percent.

“News of moderate employment gains in January led to a halt in the recent upward trend of interest rate movements,” said Frank Nothaft, Freddie Mac chief economist, noting a similar decline in mortgage refinancing.

“The 111,000 jobs added last month were fewer than had been anticipated, while the unemployment rate edged up unexpectedly.”

Freddie Mac also said that the nation’s 1-year, Treasury-indexed adjustable rate mortgages decreased to 5.49 percent from 5.54 percent. At this time last year, the 1-year ARM averaged 5.34 percent.

The 5-year hybrid ARM dropped to 5.99 percent from 6.04 percent. A year ago, the 5-year ARM averaged 5.89 percent, the mortgage agency said.

“Throughout the year we expect rates on 30-year mortgage rates to average between 6.3-6.5 percent,” Nothaft said.

“The flat or increasing rate environment will likely cause the refinance share to contract gradually. In addition, the total dollar volume of cash out refinancing will also retreat from the record $314 billion set in 2006 to around $230 billion this year.”

SOURCE: MarketWatch