Mortgage rates fell back slightly the first week of the year after posting sharp increases throughout December, according to the latest weekly survey from Freddie Mac.
Average interest rates on 30-year fixed-rate mortgages declined to 5.09 percent for the week ending Jan. 7, down from 5.14 percent the week before. Rates on 15-year loans also declined, to an average of 4.50, down from 4.54 the last week of 2009. All rates were based on an average 0.7 discount points.
By comparison, one year ago this week the 30-year average rate was at 5.01 percent, and the 15-year rate was at 4.62 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) was unchanged, averaging 4.44 percent with 0.6 points, same at the week before. One year ago this week, the 5-year ARM averaged 5.49 percent.
“Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year, said,” said Frank Nothaft, Freddie Mac chief economist. “As the economy strengthens further and the Federal Reserve (Fed) decides to raise its overnight target rate, ARM rates will follow suit because they are typically tied to shorter-term interest rates,” Northaft said. “However, the federal funds futures market does not anticipate any Fed action until the second half of 2010.”
Many analysts have been predicting that mortgage rates would rise in anticipation of the Federal Reserve winding down efforts to ease credit and boost the economy. However, the increases over the previous four weeks were greater than expected, leading some to predict a fallback.
