By Mike Colpitts
The 30-year fixed rate mortgage dropped to 3.99% or just below the 4.00% barrier this week, according to Freddie Mac. The dip in average mortgage rates from 4.08% last week came on mixed economic news, with reports on consumer confidence over the U.S. economy and the housing market showing weaker results.
The drop in rates also resulted from lower yields paid for U.S. Treasury bonds. The 15-year fixed rate loan, which is growing in popularity with consumers, was also down from last week, reaching 3.23%, seven basis points below a week ago.
It’s the first time in more than three months that interest rates have seen a roller coaster ride after reaching all-time record low levels last October. The 5-year adjustable rate mortgage (ARM) averaged 2.90% this week with an average 0.8 point, down from 2.96% last week.
The 1-year ARM also moved lower for the week to 2.78%, a drop of six basis points from its average a week earlier.
The drop in rates didn’t come as a surprise for consumers shopping to refinance home mortgages or home buyers looking for better lending news after rates dipped earlier this month. “Mortgage rates slid this week amid weaker housing economic indicators,” said Freddie Mac chief economist Frank Nothaft.
“The S&P Case Shiller 20-City Composite home price index slid in January to its lowest reading since December,” Nothaft said.
The index monitors the 20 U.S. largest metropolitan housing markets.
Housing Predictor forecasts more than 230 U.S. cities markets for the entire calendar year. Home sales also declined during the month of February as leery consumers backed off buying homes, despite near record low home borrowing rates. Pending home sales also dropped for the month, according to the National Association of Realtors.