Mortgage Rates Down

During the past year, mortgage rates have been raised 17 times in a row by the Federal Reserve, the governing body of interest rates.

But the market saw some relief this past week, in that interest rates fell, giving a little insight into what may happen in the future.

Analysts and forecasters have been debating over whether they think the Federal Reserve will raise rates again on Aug. 8. The fact that the rates fell last week has many people thinking that the Fed will finally put a stop to raising the rates for the 18th consecutive time.

In the article, “Mortgage rates fell in past week,” from the July 28, 2006 edition of The Wall Street Journal, the figures behind the rates were released.

“The average for 30-year fixed mortgage rates for the week ended yesterday was 6.72%, down from 6.80% a week earlier. A year ago, the 30-year fixed rate averaged 5.77%.”

“The average for 15-year fixed-rate mortgages this week was 6.34%, down from 6.41% one week ago but up from the year-ago 5.34%.”

A lot of the rates were down for this week, but compared to last year’s figures at this time, they are actually up.

“Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were 6.35%, down from 6.36% a week ago but up from the year-earlier 5.27%. One-year, Treasury-indexed ARMs were 5.78%, down from 5.80% but up from the year-ago 4.46%.”

These lower interest rates could be very good news for the slowing market, or at least for potential homebuyers.

People tend to take out mortgages and start to look for homes when the rates are low. The fact that the rates fell this past week is a good sign.

Interest rates depend on a lot of different factors such as the economy and inflation. They all go hand-in-hand. Of course, the Fed ultimately makes then decision on whether to raise the rates or not, depending on a variety of factors.

Mortgage rates eased ‘on indications that economic growth is moderating, inflation remains under control and the Fed just may pause raising rates for a while,’ said Frank Nothaft, Freddie Mac vice president and chief economist. Meanwhile, new-home sales for June fell to a lower-than-expected rate, he noted, adding, ‘That drop can be traced directly to higher mortgage rates, which are also helping to slow the growth of house prices in 2006.’”

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