According to government-sponsored enterprise Freddie Mac, the average rate on a 30-year fixed-rate mortgage again fell below 5% this week. Frank Northaft, Chief Economist for Freddie Mac, noted that current mortgage rates inched below the 5% range as the mortgage market waited for the results of the year’s first meeting of the Federal Reserve’s policy-setting committee.
At the conclusion of the two-day meeting, the Federal Reserve affirmed their pledge to keep interest rates near zero for “an extended period,” but not without some opposition. Thomas Hoenig, President of the Federal Reserve Bank in Kansas City, argued that the economy has recovered to the point that maintaining interest rates near zero for the short-term was unnecessary. Economists believe, however, that Hoenig’s opposition would not be a determining factor as to the definition of “extended period.” Most market analysts expect current mortgage rates to likely remain low throughout 2010, and potentially beyond.
The Federal Reserve also confirmed they expect to conclude their commitment to purchase $1.25 trillion in mortgage-backed securities by the end of the first quarter of 2010. The strategy was exceedingly effective as mortgage rates were driven down, which primarily sparked the housing recovery.
In the end, the average rate on a 30-year fixed-rate mortgage dipped to 4.98%, which stood at 5.1% one year ago. Similarly, the average rate on a 15-year fixed-rate mortgage fell to 4.39%, down from 4.8% from last year.
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January 31, 2010 @ 12:32 pm
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