Mortgage Rates Continue to Slip

Author: Tory Barringer May 22, 2014

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Mortgage rates have yet to find their bottom in 2014, dropping again this week to their lowest level since last October.

In its weekly Primary Mortgage Market Survey, Freddie Mac recorded the average rate for the 30-year fixed-rate mortgage (FRM) at 4.14 percent (0.6 point), down from 4.20 percent last week.

Last May, the 30-year fixed was at 3.59 percent and climbing amid speculation the Federal Reserve would soon start tapering its monthly asset purchases. The first cut didn't arrive until seven months later, in December.

The average 15-year FRM also dropped, declining to 3.25 percent (0.5 point) from 3.29 percent.

Turning to adjustable-rate mortgages (ARMs), Freddie Mac reported a slight decline in the average 5-year ARM, which was measured at 2.96 percent (0.4 point) for the week. The 1-year ARM was flat at 2.43 percent (0.4 point).

Declines were also reported from Bankrate.com, a personal finance website.

In its national survey, Bankrate recorded the 30-year fixed at 4.29 percent and the 15-year fixed at 3.38 percent, both down 4 basis points from last week. The 5/1 ARM, meanwhile, declined a full tenth of a percent to 3.21 percent.

Analysts for the site pointed to economic concerns both domestic and abroad as the cause for the latest drop: "The Federal Reserve remains concerned about inflation being too low, readings on the housing market have been disappointing of late—both of which lead to uncertain conclusions about the U.S. economy—and the European Central Bank is widely expected to begin their own round of bond purchases in the coming months.

"Each of these argues for interest rates, including mortgage rates, remaining lower than expected, longer than what had been expected just a few months ago."