As we near the end of the year, mortgage rates are dropping to their lowest levels since June. A contributing factor may be the announcement the Federal Reserve made at the end of October to say that it would maintain its current $85 billion per month bond-buying program. The program, which is part of the economic stimulus effort, is an asset-purchase program which has allowed mortgage rates to stay low. During the summer, the fear was that the Federal Reserve would begin winding down their program, which caused mortgage rates to increase slightly when borrowers became increasingly concerned about the costs of a mortgage.
While the Federal Reserve has reassured borrowers that they are committed to holding short-term interest rates low through 2014 and into 2015, it’s unclear exactly when changes will be made, or what those changes will be. Rates may still be above what they were at this time last year, but for now they still remain low enough to entice buyers to act quickly. Here’s what rates averaged at the end of October, and how they compare to the same time last year:
- 30 year fixed rate: 4.10% (3.39% last year)
- 15 year fixed rate: 3.20% (2.70% last year)
- 5 year hybrid adjustable rate: 2.96% (2.74% last year)
- 1 year adjustable rate: 2.64% (2.58% last year)
Do you think these rates are a sign of the market headed in a positive direction? What do you think will happen when the Federal Reserve decides to end their bond-buying program?