A key committee of the Federal Reserve met last week, and decided to leave its benchmark interest rate unchanged. Homebuyers saw a slight drop in mortgage rates.
According to Bankrate.com’s weekly national survey, the benchmark 30-year fixed mortgage rate dropped to 4.09 percent last week, from 4.11 percent the week before.
The larger jumbo 30-year fixed nosed up to 4.08 percent, and the average 15-year fixed mortgage held steady at 3.31 percent. Adjustable mortgage rates were mixed, with the 3-year ARM up to 3.52 percent, the 5-year ARM retreating to 3.50 percent and the 10-year ARM unchanged at 3.91 percent.
Mortgage rates were little changed over the week, despite yo-yoing up and down in the interim, Bankrate said.
Bond yields and mortgage rates initially climbed on strong corporate earnings and a rising stock market, only to settle back as the Fed’s concerns about low inflation came to the fore once again.
Mortgage rates are closely related to yields on long-term government bonds. The Fed holds plenty of both in the $4.5 trillion portfolio they are intending to start ratcheting back in the near future.
Being the biggest buyer and biggest holder of these securities helped bring rates down and keep them there throughout the economic recovery.
Just how much upward pressure we see on mortgage rates as they slowly unwind their holdings remains to be seen.
At the current average 30-year fixed mortgage rate of 4.09 percent, the monthly payment for a $200,000 loan is $965.24.