Mortgage rates dropped to start the new year, with the average rate for a 30-year fixed-rate mortgage (FRM) falling to 3.95%, down from 3.99% the previous week, according to Freddie Mac’s Primary Mortgage Market Survey.
A year ago at this time, the 30-year FRM averaged 4.20%.
For the week ended Jan. 4, the average rate for a 15-year FRM was 3.38%, down from last week when it averaged 3.44%. A year ago at this time, the 15-year FRM averaged 3.44%.
Thew average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was 3.45%, down from 3.47%. A year ago at this time, the five-year ARM averaged 3.33%.
“Treasury yields fell from a week ago, helping to drive mortgage rates down to start the year,” says Len Kiefer, deputy chief economist for Freddie Mac in a release. “The 30-year fixed-rate mortgage fell four basis points from a week ago to 3.95 percent in the year’s first survey.
“Despite increases in short-term interest rates, long-term interest rates remain subdued,” he adds. “The 30-year mortgage rate is down a quarter of a percentage point from where it was a year ago and the spread between the 30-year fixed and 5/1 adjustable rate mortgage is the lowest since 2009. With the FOMC minutes showing continued support for gradual increases in policy rates from many participants and inflation rates remaining low, there isn’t much upward pressure on long-term rates at the moment. Whether that changes due to a tighter labor market and the economic impact of tax reform remains to be seen.”