A Federal Home Loan Mortgage Corp (OTCBB:FMCC) survey conducted last week showed mortgage interest rates have declined for the first time in past four weeks. The lenders offering of 30-year fixed rate loans declined to 3.75% from 3.8%. The offerings for the 15-year fixed-rate also dropped to 3.03%from 3.07%.
Len Kiefer, Federal Home’s Deputy Chief Economist, said that a downward revision of 4Qeconomic growth and a drop in consumer prices resulted in the easing of rates. Housing markets are facing high prices and low supplies, which minimizes the benefit of low-interest rates on the loans. As per report, in January, the sales of previously owned houses declined to a lowest-level in last nine months with new sales making new peaks. The prices in Southern California were flat, indicating a slow start to the year.
Michael Fratantoni, the Chief Economist of Mortgage Banks Association, said that decline in interest rates is due to the jumbo mortgages offered by Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), with just 3% down-payments. It stays well-informed with the policies on mortgage offerings with the amount less than $417,000 to check if they can be supported by Fannie Mae and Federal Home. These are the two companies that guarantee more than 60%of home loans in the U.S.
Federal Home’s survey stated that borrowers who pay down payments of almost 20% of the loan amount pay 0.5% as upfront fees. It reflected the standard trend for mortgage rates. However, the actual rates are constantly rising and will be affected by a number of factors.
The report of Federal Home comes at a time when the Obama Administration announced that it won’t allow Fannie Mae to rebuild capital. The statement was given by Dr.Michael Stegman in his speech at housing finance conference. He stated that legislation will implement reforms in housing finance system.