Prospective buyers concerned with affordability received some promising returns from the latest Freddie Mac Primary Mortgage Market Survey.
Mortgage rates were down across the board for the week ending May 8, as economic growth indicators dragged interest levels to their lowest readings since Nov. 7, 2013. After a first quarter during which production in a variety of sectors was hampered by harsh winter weather, real Gross Domestic Product growth came in well below expectations. The release of that data, confirming the recent stagnation, contributed to the fall of the average 30-year fixed-rate mortgage, from 4.29 percent to 4.21 percent week over week. Rates are still higher than they were a year ago - in early May 2013 the 30-year fixed mortgage averaged 3.42 percent interest - but favorable by historical measures and not rising at the pace some analysts expected the Federal Reserve's tapering would precipitate.
Home buyers of all preferences may be able to find affordable interest terms, making paying for other necessities such as a home inspection or title and settlement services a little easier. The average rate on a 15-year fixed mortgage also fell on a week-over-week basis, from 3.38 percent to 3.32 percent. Interest on a 5-year Treasury-indexed hybrid adjustable-rate mortgage remained steady at 3.05 percent, while the average 1-year Treasury-index ARM fell from 2.45 percent to 2.43 percent.
"Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter," said Frank Nothaft, Freddie Mac's vice president and chief economist. "Meanwhile, the economy added 288,000 jobs in April, the largest since January 2012, and followed an upward revision of 36,000 jobs for the prior two months. Also, the unemployment rate fell to 6.3 percent."
Home buyer opportunities for the taking
Buying a home during the current spring season may be an especially prudent move, as Fed Chair Janet Yellen has maintained that the stimulus program will continue to be scaled back as long as steady signs of macroeconomic progress present themselves. The GDP data isn't cause for too much concern, since it was offset by solid labor returns and generally attributed to the weather's effects. Therefore, as the monthly bond purchases are continually scaled back, rates could be due to rise soon after.