Mortgage Rates Drop, Snapping a 3-Week Climb

The following is an article excerpt from CNNMoney.com by Catherine Clifford.

NEW YORK (CNNMoney.com) — Rates on 30-year fixed mortgages fell for the first time in three weeks after the Federal Reserve said last week that it expects inflation to level off, according to mortgage backer Freddie Mac.
Freddie Mac (FRE, Fortune 500) said that 30-year fixed-rate mortgages averaged 6.35% with an average 0.6 point in the week ending Thursday, down from 6.45% last week. Last year at this time, the 30-year loan averaged 6.63%.
Last week, the Federal Reserve left its key short-term interest rate unchanged at 2%. For the previous nine months, however, the Fed had cut interest rates seven times. In the written statement released by the central bank at the time of the announcement, the Fed said it expects inflationary pressures to ease later this year, although it remains concerned about increasing oil and commodity prices.
The 15-year fixed rate mortgage this week averaged 5.92% with an average 0.6 point, down from last week when it averaged 6.04%. A year ago at this time, the 15-year fixed rate mortgage averaged 6.30%.
Five-year adjustable-rate mortgages (ARMs) averaged 5.78% this week, with an average 0.7 point, down from last week when it averaged 5.99%. A year ago, the 5-year ARM averaged 6.29%.
One-year ARMs averaged 5.17% this week with an average 0.6 point, down from last week when it was 5.27%. At this time last year, the 1-year ARM averaged 5.71%.
A point, or "discount point," can be purchased at the time of closing to decrease the mortgage rate. Each point costs 1% of the loan amount and each point that a borrower purchases lowers the the loan interest rate.
The Labor Department reported a net loss of 62,000 jobs in the month. The June job loses brought the number of job loses to 438,000 by the U.S. economy in 2008, raising fresh concerns about the weakness of the economy. Given the recent economic data, "homebuyers looking to get out into the marketplace should take advantage of these dips," said Gumbinger.
"If there is a dip – an improvement in interest rates – that makes it a good time to go sign up for a deal," he said. "Don't wait for interest rates to be significantly lower – because the odds don't favor that."

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