The Federal Reserve’s move to cutback even more stimulus has kept mortgage rates low and they have now dropped to a two-month low. The average rate for a 30-year fixed mortgage was 4.32 percent this week, down from 4.39 percent, Freddie Mac said today. The average 15-year rate dropped to 3.40 percent from 3.44 percent.
The Federal Open Market Committee said yesterday it will trim its monthly bond buying by $10 billion to $65 billion. The purchases have kept borrowing costs at historic lows, bolstering the housing recovery. Home prices in 20 U.S. cities rose in November from a year earlier by the most since 2006, according to the S&P/Case-Shiller index released this week.
“To the extent that tapering is going to remain modest in an improving economic environment, we should expect any increase in mortgage rates to be modest,” said Millan Mulraine, deputy head of U.S. research and strategy for TD Securities in New York. “What’s important for the housing market is what happens in the labor market, and there we’ve seen signs of improvement.”
Overall Home Sales
While home sales overall are down from December, much of the cold weather and harsh conditions are to blame. Home sales numbers overall in 2013 were up by 16.4% from the previous year, which shows that many are starting to look into buying again as the economy continues to pull out of what happened in 2008.
U.S. employers added 74,000 workers last month after a revised 241,000 gain in November that was larger than initially estimated, the Labor Department reported on Jan. 10. The unemployment rate dropped to 6.7 percent, a five-year low.