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Mortgage interest rates changed very little from beginning to end in February, according to mortgage finance giant Freddie Mac.
February 4
The average interest rate on a 30-year fixed rate mortgage (FRM) inched up to 5.01 percent, excluding points, during the first week of the month, up from 4.98 percent the week before. 15-year FRMs moved slightly to 4.40 percent, an increase from 4.39 percent in the last week of January, while one-year adjustable rate mortgages (ARMs) fell to 4.22 percent from 4.29 percent.
"Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac vice president and chief economist. "Pending existing home sales rebounded by one percent in December from a record drop in November... Mortgage applications for home purchases jumped ten percent at the end of January, according to figures from the Mortgage Bankers Association. Even more encouraging news came from the Federal Reserve's Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009."
February 11
During the second week, rates on 30-year FRMs fell to 4.97 percent, 15-year FRMs moved down to 4.34 percent and one-year ARMs jumped up to 4.33 percent.
February 18
Long-term rates continued to decline in the middle of the month with the 30-year FRM average falling to 4.93 percent, and the 15-year FRM slipping to 4.33 percent. The one-year ARM also fell to 4.23 percent.
"Mortgage rates eased for the second week, while economic data released suggest that the housing market may be in a slow state of recovery," said Nothaft.
February 25
Rates were largely back up to their original February readings by the last week, with 30-year FRMs carrying an average rate of 5.05 percent, 15-year FRMs averaging 4.40 percent, and one-year ARMs sitting low at 4.15 percent.
What's Next for Interest Rates?
Everyone seems to be waiting to see if the Fed will actually finish its purchases of mortgage-backed securities by the end of March as promised. Rates will likely remain very close to five percent this month but could jump significantly next month if the Fed pulls out completely and investors start demanding greater returns on these now riskier products.
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