Freddie Mac, which is short for Federal Home Loan Mortgage Corporation (FHLMC), was established by the U.S. government in 1970.
Freddie Mac, which is short for Federal Home Loan Mortgage Corporation (FHLMC), was established by the U.S. government in 1970. Its primary goal is to provide homebuyers with better access to home financing.
The agency conducts a weekly survey on the housing industry. This survey asks lenders and banks for the mortgage interest rates they offer to borrowers, inclusive of closing costs and discount points. The rates quoted assume that the borrower has paid 1% of the total loan value in origination fees.
For this week, Freddie Mac reported that the average 30-year fixed rate retreated from its recent highs of 3.63% last week and fell to 3.54% this week. As for the average 15-year fixed rate, Freddie Mac also noted a decline from last week’s 2.79% rate to just an average of 2.72% this week.
Compared to the same week last year, average fixed mortgage rates are considerably lower. Last year, the average 30-year fixed rate stood at 4.08%. From there, the rate bottomed out around 3.31% towards the end of the year then stabilized around 3.5% at the start of 2013.
Freddie Mac Chief Economist Frank Nothaft noted that average mortgage rates are likely to stay within their current levels for the rest of the year as the U.S. Federal Reserve expressed no rush to tighten monetary policy anytime soon. During the latest Fed statement, Chairman Ben Bernanke remarked that the policymakers continue to watch inflation and employment very closely to determine whether the U.S. economy can do without quantitative easing.
In addition, the Fed cut their inflation forecasts for the year as they expect consumer price levels to remain subdued in the near term. This suggests that interest rate hikes are not imminent, even for home mortgage lenders. For now, the relatively stable interest rate environment is attracting demand for mortgages, both for home purchases and refinancing.