U.S. Federal Reserve chairman Ben Bernanke’s recent statements about the bond purchasing program reverberated in the mortgage market this week, causing mortgage rates to edge down slightly, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average fell to 4.37 percent with an average 0.7 point, a week after jumping to its highest point this year. It was down from 4.51 percent a week ago, but up from 3.53 percent a year ago. Since it surged past 4 percent at the end of the last month, the 30-year fixed rate has remained above that mark.
The 15-year fixed-rate average also declined, going to 3.41 percent with an average 0.7 point. It was 3.53 percent last week and 2.83 percent a year ago. The 15-year fixed rate has hovered above 3 percent for the past seven weeks.
Hybrid adjustable rate mortgages were mixed. The five-year ARM sank to 3.17 percent with an average 0.6 point. It was 3.26 percent a week ago.
The one-year ARM held steady at 2.66 percent with an average 0.4 point, the same as it was last week.
“Fixed mortgage rates fell as Federal Reserve (Fed) Chairman Bernanke helped ease market concerns about the Fed reducing its bond purchases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “During a question and answer session following a speech on July 10th, Chairman Bernanke indicated that a highly accommodative monetary policy is what’s needed in the U.S. economy.
“Indications of a slowing in the economic recovery also placed downward pressure on mortgage rates. Consumer sentiment fell to a three month low in July while retail sales in June grew by only 0.4 percent, which was half of the market consensus forecast. In addition, housing starts fell in June to the slowest pace since August 2012.”
The recent rise in interest rates has led fewer people to refinance their mortgages, according to the latest data from the Mortgage Bankers Association.
The refinance share of mortgage activity dropped to its lowest level since April 2011, accounting for 63 percent of total applications.
The Market Composite Index, a measure of total loan application volume, fell 2.6 percent from the previous week. The Refinance Index dropped 4 percent to its lowest level since July 2011. The Purchase Index increased 1 percent.