Wall Street analysts and economist are positive that economic growth will continue in 2014. The Federal Reserve announced in December that it would start tapering its $85 billion monthly bond-buying program and reduce its efforts to lower interest rates.
Freddie Mac: Average mortgage interest rates increase
Given the continuous growth of the economy and the action of the Federal Reserve, there is a big possibility that the borrowing cost for home buyers will increase. The average interest rate for a 30-year-fixed-rate-mortgage (FRM) increased to 4.48%, according to the latest results of the Primary Mortgage Survey (PMMS) conducted by Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) today.
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According to the government controlled mortgage giant, the average interest rate for the 30-year fixed-rate mortgage (FRM) last week was 4.53%. During the same week a year ago (week ending January 2), the average 30-year FRM was only 3.34%.
The survey also showed that lenders are offering an average interest rate of 3.55% for a 15-year FRM this week, up from 3.52% last week. During the same period a year earlier, the median interest rate was 2.64%.
Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) also reported that the interest rate for a 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) rose to 3.05% from 3% and the average interest rate for 1-year Treasury-indexed ARM dropped to 2.56% from 2.57%.
Stronger economic recovery
In a statement, Frank Nothaft, vice president and chief economist at the Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) said, “Mortgage rates edged up to begin the year on signs of a stronger economic recovery.” Nothaft added that the pending home sales index climbed by 0.2% in November after five consecutive months of decline.
He also noted that the Conference Board reported that the consumer confidence in December increased and data from the S&P/Case-Shiller showed that the prices of homes in 20 cities jumped 13.6 over the past twelve months the ended October 2013.