Mortgage rates bounced off record lows this week as the Federal Reserve offered few clues as to whether it will unleash another round of asset purchases to stimulate the economy. Looking back a week, homeowners were rushing to refinance at levels not seen since 2009.
Rates on 30-year fixed-rate mortgages (FRMs) averaged 3.55 percent with an average 0.7 point for the week ending Aug. 2, up from 3.49 percent last week but down from 4.39 percent a year ago, Freddie Mac said in reporting the results of its weekly Primary Mortgage Market Survey. Last week's rate for 30-year fixed-rate loans was an all-time low in Freddie Mac records dating to 1971.
For 15-year fixed-rate mortgages, rates averaged 2.83 percent with an average 0.6 point, up from 2.8 percent last week but down from 3.54 percent a year ago. Last week's rate for 15-year fixed-rate mortgages was a low in records dating to 1991.
Rates on five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 2.75 percent this week with an average 0.6 point, up from 2.74 percent last week but down from 3.18 percent a year ago. Rates on five-year ARM loans hit a low in records dating to 2005 of 2.69 percent during the week ending July 19.
For one-year Treasury-indexed ARMs, rates averaged 2.7 percent with an average 0.4 point, down from 2.71 percent last week and 3.02 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.68 percent during the week ending July 5.
A separate survey by the Mortgage Bankers Association showed applications for refinancings during the week ending July 27 increased 0.8 percent from the previous week to its highest level since the week ending April 17, 2009. With demand for purchase loans falling a seasonally adjusted 2 percent from the week before, applications to refinance accounted for 81 percent of mortgage loan applications.
Wrapping up a two-day meeting yesterday, a Federal Reserve committee responsible for setting monetary policy gave little indication on whether the Fed will or will not launch a third round of quantitative easing, or "QE3."
In a statement, the Federal Open Market Committee said growth in employment has been slow in recent months, and household spending has been rising "at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed."
Lower gasoline prices have curbed inflation, and the committee said it will closely monitor economic and financial developments, providing "additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."
Some Fed observers had expected its members would hold off on a decision on whether or not to embark on QE3 until its next meeting in September.
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