Unexpectedly low rates defy Fed taper expectations

Homebuyers get break as 30-year fixed mortgage rate hits nearly three-month low

Feb.February 12, 2014 06:04 PM

A drop in interest rates in the last month defied forecaster expectations and gave homebuyers a bit of unexpected relief as the Federal Reserve announced plans to begin tapering its purchases of mortgage-backed securities.

The average 30-year fixed rate mortgage in the U.S. fell to a rate of 4.23 percent last week, hitting nearly hitting a three-month low and a 0.3 percentage point lower than at the start of 2014 — a tumble in the cost of borrowing that will enable homebuyers to make purchases sooner than planned.

“People are getting a second chance, and that is bound to give a boost to the housing market,” Sam Khater, deputy chief economist at mortgage data firm CoreLogic told Bloomberg News. “It’s not a game changer unless emerging markets situation worsens and rates get even cheaper.”

Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the National Association of Retailers all predicted that January rates would jump by at least 0.3 percentage points in the first quarter, but yields on 10-year treasuries shrank as investors drove up bond prices. [Bloomberg News]Julie Strickland

Related Articles

(Credit: iStock)

Thousands of CRE borrowers call on banks for debt relief

Banks, funds, mortgage REITs, and agencies like Fannie Mae and Freddie Mac have all begun adjusting their lending approach in face of the economic downturn (Credit: iStock)

These are the sectors where real estate lending is still happening: report

Angel Oak Cos. CEO Michael Fierman and Flagstar Bancorp Inc. CEO Alessandro DiNello (Credit: Angel Oak, Flagstar, iStock)

Mortgage market dries up for unconventional home loans

As banks demand more collateral and developers stop making mortgage payments, analysts expect a world of pain to befall debt funds, mortgage REITs (Credit: iStock)

Mortgage REITs, debt funds face catch-22 between banks, developers

From left: Ace Watanasuparp, SVP National Director of Strategic Sales, Citizens Bank; Alan Rosenbaum, CEO/Founder, GuardHill Financial Corp; Mark Favaloro, President, New York Association of Mortgage Brokers

Home lending in the time of corona: “Underwriting is really difficult right now”

Ginnie Mae principal executive vice president Seth Appleton (Credit: Wikipedia Commons; MHS)

Ginnie Mae to use natural disaster program to help struggling mortgage servicers

(Credit: iStock)

“Kicking the can down the road”: Real estate industry says $2T relief plan doesn’t do enough

Federal Reserve Board Chairman Jerome Powell (Photo by Win McNamee/Getty Images)

Fed to mall and hotel owners: Drop dead