Rates on the most popular types of mortgages were mixed-to-lower this week according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages (FRMs) fell by three basis points (0.03 percent) to 3.71 percent, taking back last week's increase of a like amount. Conforming 5/1 Hybrid ARM rates remained unchanged, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.01 percent for a second straight week.
"The Federal Reserve believes that the economy is strong, and appears to be continuing on a path that will bring a lift in short-term interest rates by mid-year," said Keith Gumbinger, vice president of HSH.com. "However, given soft inflation readings and slower growth in place at the moment, it's not clear that the market is convinced that a move is coming quite that soon."
After climbing at a five percent rate in the third quarter of 2014, Gross Domestic Product (GDP) slowed markedly in the fourth quarter, easing to a 2.6 percent growth rate, so the economy has decelerated. Growth for all of 2014 is presently estimated at 2.4 percent, a modest pace. With summer and fall 2014's acceleration behind us, and with headwinds to growth and inflation evident, it may be that the Fed does not make a move until later in the year.
"Regardless of the timing of a move by the Fed, it will only be a small change to interest rates, and not the last. The actual Fed change to short-term rates will probably prove inconsequential to long-term mortgage rates when it comes, as mortgage rates will probably already have nudged higher before then," said Gumbinger. "For fixed-rate mortgages, it's often been the case that the market moves first, reacting more quickly to the same factors the Fed sees, as investors have no six-week lag between meetings before decisions are made."
Average mortgage rates and points for conforming residential mortgages for the week ending Feb. 3, according to HSH.com:
Conforming 30-year fixed-rate mortgage
►Average rate: 3.71 percent
►Average points: 0.14
Conforming 5/1-year adjustable-rate mortgage
►Average rate: 3.01 percent
►Average points: 0.07
Average mortgage rates and points for conforming residential mortgages for the previous week ending Jan. 27 were, according to HSH.com:
Conforming 30-year fixed-rate mortgage
►Average rate: 3.74 percent
►Average points: 0.14
Conforming 5/1-year adjustable-rate mortgage
►Average rate: 3.01 percent
►Average points: 0.08
