Mortgage Rates Dip, Inventory on the Rise

iStock_000012512439Small After a dramatic rise over the past month, mortgage rates trended downward this week. Key rates cooled, along with worries that the Federal Reserve would taper its massive stimulus policies — a bond-purchase program involving $85 million worth of Treasury notes and mortgage-backed securities. Even after the monthlong surge, rates remain historically low and continue to fuel both the housing recovery and growth within the economy.

Testifying before the House Financial Service Committee this week, Federal Reserve Chairman Ben Bernanke indicated that the Fed has no firm timeline in place for scaling its bond purchase program. Rates had spiked due to speculation that the Fed would be curbing the buyback program that has helped the housing market stabilize.

“We really are seeing an increase in inventory that has come in, just in the last couple months,” said realtor.com spokesperson Leslie Piper in a recent interview with Mark Crumpton on Bloomberg Television’s “Bottom Line.” “We’re seeing a lot of consumer confidence; we’re seeing employment rates go up. That’s obviously going to affect the amount of buyers out there.”

After hitting a two-year high a week ago, the average rate on a 30-year fixed mortgage saw a 0.14 percentage-point drop, according to the latest survey by mortgage lender Freddie Mac. Previously at 4.51 percent, the average rate on a 30-year fixed loan dropped to 4.37 percent. It had neared a historic low as recently as early May before spiking in July.

The average rate on a 15-year fixed loan saw its own decrease, dropping by 0.12 percentage point from 3.53 percent a week ago to 3.41 percent this week. It previously achieved a historic low in early May, when it fell to 2.56 percent and averaged 2.83 percent a year ago at this time.

Affordable loans continue to have a positive impact on the once-depressed housing market. The recent release of the Fed Beige book didn’t yield any surprises on the outlook of housing growth, according to mortgage expert Al Bowman. However, the report did indicate positive gains across the United States.

The average rate on a 5-year hybrid adjustable loan also saw a decrease week over week, falling to 3.17 percent from 3.26 percent a week ago. For the fourth consecutive week, the average on a 1-year hybrid remained static at 2.66 percent.

For home buyers hoping to take advantage of the low interest rates, now may be the time to act. In the latest Mortgage Rate Trend Index by Bankrate.com, 56 percent of the analysts and experts polled believe mortgage rates will go down over the next week. “Mortgage rates seem to be retreating slightly as the Fed tries to calm the markets,” says Polyana da Costa, senior mortgage reporter for Bankrate.com. “But after rising more than a full percentage point in such a short period, a slight drop in rates won’t make that much of a difference to most borrowers.”