Mortgage rates remained at or near record lows this week as the Federal Reserve signaled that measures designed to keep a lid on interest rates will remain in place for some time to come.
Rates on 30-year fixed-rate mortgages averaged 3.32 percent with an average 0.7 point for the week ending Dec. 13, down from 3.34 percent last week and 3.94 percent a year ago, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. Rates on 30-year fixed-rate loans hit a low in Freddie Mac records dating to 1971 of 3.31 percent during the week ending Nov. 21.
For 15-year fixed-rate mortgages, rates averaged 2.66 percent with an average 0.6 point, down from 2.67 percent last week and 3.21 percent a year ago. Rates on 15-year fixed-rate loans hit a low in Freddie Mac records dating to 1991 of 2.63 percent during the week ending Nov. 21.
Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.7 percent with an average 0.6 point, up from 2.69 percent last week but down from 2.86 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 Dec. 6.
For one-year Treasury-indexed ARM loans, rates averaged 2.53 percent with an average 0.5 point, down from 2.55 percent last week and 2.81 percent a year ago. That’s a new low in Freddie Mac records dating to 1984.
Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans increasing for a fifth week in a row, to a level 9 percent greater than a year ago. But applications to refinance still accounted for 84 percent of all mortgage applications.
Mortgage rates are expected to stay at historically low levels for some time, as the Federal Reserve continues to buy up $40 billion in mortgage-backed securities issued by Fannie Mae and Freddie Mac each month.
Wrapping up a two-day meeting Wednesday, the Federal Open Market Committee issued a statement saying it will continue those purchases, and keep buying $45 billion in long-term Treasury bonds each month.
The committee said the Fed will continue purchasing mortgage-backed securities and Treasurys as long as the outlook for the labor market "does not improve substantially," although the size, pace and composition of the purchases will "take appropriate account of the likely efficacy and costs of such purchases."
The Fed is projecting that unemployment will average 7.4 to 7.7 percent in the fourth quarter of 2013, which would represent only a small improvement from the 7.8 to 7.9 percent projection for the same quarter this year.
The committee said the Fed intends to keep the federal funds short-term rate in the "exceptionally low range" of 0 to 0.25 percent for as long as the unemployment rate remains above 6.5 percent, and inflation projections for the next year or two ahead are no more than 2.5 percent.