Mortgage Rates Dip Following Fed Announcement

After rising for three consecutive weeks, fixed mortgage rates took a breather in the immediate aftermath of the Federal Reserve’s June 29th interest rate hike. The average 30-year fixed rate mortgage slid to 6.91 percent from 6.93 percent the day before last week’s Fed announcement. According to Bankrate.com’s weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.31 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing sank to 6.54 percent. On larger loans, the average jumbo 30-year fixed rate remains above the 7 percent threshold, at 7.06 percent. Adjustable rate mortgages were mixed. The average 5/1 adjustable rate mortgage fell to 6.55 percent, and the average one-year ARM increased to 6.11 percent.

Mortgage rates backpedaled following the Fed’s June 29 statement, which was initially perceived as carrying a much softer tone than in previous months. As a result, yields on ten-year Treasury notes gave ground, with mortgage rates following suit. Mortgage rates are closely related to yields on long-term government bonds. But following the July 4 holiday, rates perked up on a rosy prediction of June job growth, though not enough to erase the decline late last week. Over the next couple of weeks, any combination of strong job growth and continued inflation worries will prime the pump or an August Fed hike — and push mortgage rates higher.

Fixed mortgage rates moved up notably in the first half of the year. As 2005 came to a close, the average 30-year fixed mortgage rate was 6.28 percent, meaning that the monthly payment on a loan of $165,000 was $1,019.16. With the average 30-year fixed rate now 6.91 percent, the same loan originated today would carry a payment of $1,087.79. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

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