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Latest Survey on Mortgage Rates

This August, average 30-year mortgage rates dropped to 4.10% in the US. This is the lowest mortgage rates have fallen in 52 weeks. By contrast, 15 year mortgage rates rose to from 3.23% to 3.25%, remaining well within average rates for the year.

Adjustable rate mortgages increased slightly in the same time period. Average rates for five-year ARM rose to 2.97% from 2.95% in the same period, and one year ARM rates rose from 2.38% to 2.39%.

Overall, 30-year fixed mortgage rates slowly dropped across the United States from 2013 to 2014. However, on average rates were higher than in August 2012. ARM rates remained fairly stable within the 2.9% range.

For homebuyers across the US, this is lukewarm news.Despite low costs, market sales for new homes slowed by 2.4% in July on the back of careful credit practices, slow wages and a still-recovering job market. Many potential homeowners are also still opting to rent, or downsizing homes to cut costs.

Sales for previously owned homes were more optimistic and have risen since the start of the year. According to the National Association of Realtors, sales of previously owned homes reached over 5.56 million by the middle of the year, a 2.4% increase across the US. Pending home sales also increased by 3.3% in July across all regions.

Despite the increase, this does not reflect the 5.5% increase at the same time last year. The growth may be compounded by modest increase in home prices across the US, especially for homes priced above $200,000.

Last year’s rates averaged 4.41% in September, and rose to 4.58% in December 2013. 15-year fixed mortgage rates averaged 3.56% over the same period. According to the Associated Press, the Federal Reserve’s monthly bond purchases have decreased in an effort to keep long-term borrowing rates low for homeowners moving forward.

For military members, a new agreement with bank to assist active-duty military members may also take advantage of low borrowing rates and a 6% mortgage rate cap under the Servicemembers Civil Relief Act. Banks in this partnership include Wells Fargo and Bank of America.

30-year mortgage rates are expected to continue to drop through the remaining quarters, and hit 3.92% by December 2014. In contrast, 15-year mortgage rates are expected to remain stable until January 2015, with little to no change.

Rate calculations and averages did not take fees and points into consideration. However, for 30-year rates fees and points were at 0.5, while 15-year rates were at 0.6 points. Commercial mortgages were also not included in this report.

Calculations based on fixed rate mortgage rates
Sources: Freddie Mac, HSH.com, Associated Press

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