Mortgage interest rates have dropped to their lowest point since September, according to the latest national survey by the Federal Home Loan Mortgage Corp.
The survey said 30-year, fixed-rate mortgages averaged 8.84 percent for the week ending Feb. 17, down from 8.94 percent for the week ending Feb. 3.
Rates have not been this low since the average dipped to 8.73 percent on Sept. 22.
“Rates are going down,” said Steve Veedell, publisher of the Mortgage Index, a Houston newsletter. “We may float down a little more, but I don’t think we’ll see anything like we’ve seen in the last three weeks.”
Although rates have eased down slightly, they still may appear high to people who received home loans earlier in the 1990s. Thirty-year mortgages sat for a long time below 8 percent until rates began to rise last spring. The Freddie Mac average hit a 25-year low of 6.74 percent in October 1993.
The Federal Reserve has raised interest rates seven times in the last year. But unlike what often had occurred in the past, mortgage rates did not follow the lead of the Fed upward.
“The bond market saw the higher unemployment figures as an indication the economy was slowing, therefore lessening the threat of inflation and causing interest rates to dip slightly,” said Robert Van Order, Freddie Mac chief economist.
As higher rates have prevailed in recent months many borrowers had been turning to adjustable rate mortgages, but that trend subsided about two weeks ago, said Marc Laird, president of Cornerstone Mortgage of Houston.
The national survey by Freddie Mac said for one-year adjustable rate mortgages, lenders were asking an average initial rate of 6.66 percent, down from 6.75 percent two weeks ago.
Patti Hetzel of Trenton Mortgage in Houston said more than half of her customers have been opting for adjustable rate mortgages.
Many consumers have been scared off by the Federal Reserve rate hikes and they don’t realize that mortgage interests rates have actually gone down slightly, said Gill Woods, president of the National Association of Realtors.
“Every single time they see the Fed raise rates they automatically think it’s harder for them to get into a home,” Woods said.
Many consumers, Wood said, are saying, “They must be going to 10 percent. I’m not going to worry about buying a house.”
