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Interest rates remain steady with Fed's latest announcement
  • Oct 02, 2015
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  • interest rates mortgage fed rates

The U.S. Federal Reserve reached a decision regarding a potential hike in interest rates on Sept. 17, and the final verdict indicated the key funds rate would remain steady, according to Reuters.

The U.S. Federal Reserve reached a decision regarding a potential hike in interest rates on Sept. 17, and the final verdict indicated the key funds rate would remain steady, according to Reuters. 

"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," noted the Fed in its policy statement following the meeting.

Before the final decision was reached, interest rates for home loans remained relatively unchanged when compared to the previous week. 

 

Fixed-rate mortgages tick up slightly. According to Freddie Mac's Primary Mortgage Market Survey, both 30- and 15-year FRMs increased by 0.01 percentage points. The current average 30-year FRM rose to 3.91%, and the 15-year FRM ticked up to 3.11%. 



Adjustable-rate mortgages see little change. In addition, the average 5-year Treasury-indexed hybrid ARM settled at 2.92%, which is just above last week's average of 2.91%. However, the 1-year Treasury-indexed ARM slid slightly to 2.65% from 2.63%. 

"The Treasury market was relatively quiet this week, and as a result the 30-year mortgage rate barely budged," noted Sean Becketti, Freddie Mac's chief economist.

 

Current housing market conditions remain strong. The real estate industry has improved greatly since the housing market crisis in 2008. 

"Low mortgage rates help to support housing markets, which continue to bring good news," added Becketti. "The National Association of Home Builders' HMI came in above expectations at 62, which is a ten year high."

The Housing Market Index (HMI) is based on the responses of members of NAHB. It measures the current health of the single-family housing market. 

In addition, even if rates had risen after the Fed's two-day meeting, the broader real estate market would probably not have been impacted too adversely. In fact, Becketti indicated the U.S. is still on track to experience the best year of completed home sales since 2007. 

 

Buyers should expect low rates to continue. Interested buyers can expect manageable interest on U.S. home mortgages to remain an option, as Becketti anticipates consumers will still have access to low rates for the foreseeable future. 

"While our outlook incorporates a moderate increase in mortgage rates over the next 18 months, rates are likely to remain low by historical standards and should not be a determining factor for most Americans looking to purchase a home," noted Becketti. 

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