low rates could be the cause of the recent increase in home sales.
Chicago, IL (PRWEB) September 05, 2014
The Federal Savings Bank, a veteran owned lender, saw that fixed mortgage rates didn't have any noticeable changes in the first week of September.
For the week ending Sept. 4, the average interest rate for a 30-year fixed home loan held steady at 4.10 percent, unchanged from the previous week, Freddie Mac reported. Compared to the same time a year ago, the average was well below 4.57 percent, continuing the streak of year-over-year improvements. On September 4th, the Associated Press reported the recent average is a 52-week low.
For 15-year FRMs, the average rate was 3.24 percent for the week ending Sept. 4, a slight drop from 3.25 percent the previous week. At the same time the previous year, the average was 3.59 percent.
"Mortgage rates were little changed amid a week of light economic reports," said Frank Nothaft, Freddie Mac vice president. "Of the few releases, the ISM's manufacturing index rose to 59.0 in August from 57.1 the previous month. This was the highest reading of the index since March 2011."
Adjustable-rate mortgages also held steady in the week ending Sept. 4, with the average interest rate for 5-year Treasury-indexed hybrid ARMs unchanged week over week at 2.97 percent. At the same time a year ago, the average was 3.28 percent. There was a slight weekly increase for 1-year Treasury-indexed hybrid ARMs, which went up to an average 3.40 percent from 3.39 percent.
Sales increase could be result of low rates
The Federal Reserve Bank has continued to taper is quantitative easing program, which was meant to keep interest rates low to encourage spending. However, as the Fed scales back its monthly bond-buying rate, mortgage interest has remained on the lower side, according to the AP. This trend is evidenced by the year-over-year declines, as the Fed first mentioned tapering mid-2013 and rates shot up through the remainder of the year as a result.
The source said the pervasive nature of low rates could be the cause of the recent increase in home sales.
Furthermore, moderate home price gains could aid in the stronger pace of sales as affordability expands. So far in 2014, affordability has been a key factor behind the continued strength of the housing recovery, as it was a crucial factor in spring and summer while both construction and sales waned.
For more information about low cost mortgage options, contact The Federal Savings Bank, a veteran owned bank.