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After steady increases, mortgage rates drop

After trending upward for more than a month, mortgage rates ticked lower this week, according to new data released Thursday by Freddie Mac.

The 30-year fixed-rate average this week fell to 3.93 percent from 3.98 percent after rising for six consecutive weeks. This time last year, the 30-year averaged 3.66 percent.

The 15-year average also moved downward, dropping to 3.04 percent from 3.10 percent  last week. That is slightly higher than one year ago, when it averaged 2.95 percent.

“Mortgage rates were relatively unchanged this week as market participants awaited the Federal Reserve’s (Fed) monetary policy announcement,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“The Fed stated that economic growth has been expanding at a moderate pace and that labor market conditions have shown further improvement, although the unemployment rate remains elevated,” Nothaft said. “It noted inflation has been running below the Fed’s longer-run objective as well. As a result, the Fed will continue its bond-buying program at the current pace and maintain its highly accommodative monetary policy stance.”

“The Fed,” Nothaft added, “also affirmed that the housing sector has strengthened further. For instance, single-family housing permits increased nearly 2 percentage points in May to an annualized pace of 649,000 homes, the most since May 2008. In addition, homebuilder confidence in June rose to its highest reading since March 2006.”

Hybrid adjustable rate mortgages were mixed this week, with the average five-year ARM remaining steady at 2.79 percent and the average one-year falling slightly to 2.57 percent from 2.58 percent last week.

The five-year ARM is above its 2.77 percent level from a year ago, while the one-year is below its 2.74 percent rate from this time in 2012.

Mortgage application volume reversed course last week, decreasing 3.3 percent from the week before, according to the latest figures from the Mortgage Bankers Association. The group’s weekly purchase index and the refinance index each dropped 3 percent.





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