Mortgage rates dipped this week following San Francisco Federal Reserve Bank President Janet Yellen’s words hinting of a decline in inflation, according to surveys conducted by Freddie Mac and

Yellen spoke encouragingly Tuesday to the Emeryville, Calif., Chamber of Commerce, and said that she believes “it is critical that inflation trend in a downward direction over the medium term. Indeed, my expectation is that this is the most likely outcome.”

Mortgage rates are influenced by what the bond market thinks will happen to prices, according to, and if bond traders believe inflation will rise, mortgage rates rise, too. If bond traders believe inflation will level off or fall, the same thing often happens to mortgage rates. Bond yields fluttered downward in the hours after Yellen’s speech, and long-term mortgage rates followed.

In Freddie Mac’s survey, the 30-year fixed-rate mortgage fell this week to an average 6.43 percent, down from last week when it averaged of 6.47 percent. The average for the 15-year fixed-rate mortgage also sank during the period, falling from 6.16 percent to 6.11 percent.

Points, which are fees charged by lenders for loan processing expressed as a percent of the loan, averaged 0.5 on the 30-year and 0.4 on the 15-year loans.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 6.1 percent this week, with an average 0.6 point, down from last week when it averaged 6.14 percent. The one-year Treasury-indexed ARM averaged 5.6 percent this week, with an average 0.7 point, down from last week when it averaged 5.63 percent.

“Although 30-year mortgage rates are about three-fourths of a percentage point higher than they were last year, it’s good to keep in mind that rates have dropped from the high of 6.8 percent reached just eight weeks ago,” said Frank Nothaft, Freddie Mac vice president and chief economist. “And with short-term interest-rate increases seemingly on hold, for a while at least, interest rates overall should not experience any big shifts in either direction.

“The risk to our forecast of relatively stable mortgage rates is that inflation will unexpectedly heat up, causing bond markets to raise their expectations that the Fed will intervene by raising short-term rates. In that case, mortgage rates will again start to rise.”

In’s survey, fixed mortgage rates dipped again, falling for the ninth time in the past 11 weeks. The average 30-year fixed mortgage rate is now 6.44 percent, with an average of 0.3 discount and origination points.

The average 15-year fixed-rate mortgage popular for refinancing fell again to 6.12 percent, reported. On larger loans, the average jumbo 30-year fixed rate headed lower to 6.69 percent. Adjustable-rate mortgages dropped this week, with the average 5/1 ARM declining to 6.19 percent, and the average one-year ARM tumbling to 5.89 percent.

Fixed mortgage rates are nearly one-half percentage point lower than when the Fed last hiked rates at the end of June, according to At the time, the average 30-year fixed mortgage rate was 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.44 percent, the same loan originated today would carry a monthly payment of $1,036. Fixed mortgage rates remain an attractive refinancing alternative for adjustable-rate borrowers facing sharp payment adjustments.

The following is a sampling of’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York – 6.39 percent with 0.05 point

Los Angeles – 6.46 percent with 0.48 point

Chicago – 6.6 percent with no points

San Francisco – 6.48 percent with 0.25 point

Philadelphia – 6.33 percent with 0.38 point

Detroit – 6.52 percent with no points

Boston – 6.47 percent with 0.15 point

Houston – 6.4 percent with 0.57 point

Dallas – 6.41 percent with 0.49 point

Washington, D.C. – 6.33 percent with 0.6 point

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