Mortgage rates fall for a second straight week

Average mortgage interest rates fell slightly for the second week in a row, according to the latest Freddie Mac Primary Mortgage Market Survey.

The average rate on a 30-year fixed mortgage last week was 3.92 percent, down from 3.96 the week before. A year ago, the average interest rate on 30-year mortgages was 3.48 percent.

For 15-year fixed mortgages, the average rate fell from 3.23 to 3.20 percent last week, which is up from last year’s average of 2.78 percent.

See also: Ultimate List of Physician Mortgage Loans

The rate on 5-year Treasury-indexed hybrid adjustable rate mortgages fell by the same margin, from 3.21 percent two weeks ago to last week’s average of 3.18 percent. A year ago at this time, the 5-year ARM average 2.78 percent.

All three mortgage categories carried an average of 0.5 points for the week. Mortgage points, also known as discount points, are fees a borrower pays to the lender at closing in exchange for a reduced interest rate. A point costs 1 percent of the amount borrowed, i.e. $1,000 for every $100,000 of your mortgage.

Analysts say the movement of mortgage rates this week and beyond will depend largely on market reaction to the Federal Reserve’s announcement last week that it would soon begin reducing its balance sheet.

Following the 2008 financial crisis, the Fed purchased a large quantity of U.S. Treasuries and mortgage-backed securities to prevent a collapse of the financial system. Today, it hold about $4.5 trillion worth of those assets.

With the economy improving, pressure is mounting for the Fed to shed those assets, which it indicated would be “relatively soon” last week. Some analysts predict the sell-off will push Treasury yields up, which would likely cause mortgage rates to rise as well.