Mortgage rates dropped again last week to levels not seen since May 2013.
According to Freddie Mac’s weekly mortgage market survey, the 30 year fixed rate fell by three basis points to 3.63% from 3.66%.
The 15 year fixed rate dropped a bit more from 2.98% to 2.93%.
One year ago, the 30 year rate averaged 4.39% and the 15 at 3.44%. Mortgage rates have been surprisingly low for such an extended period of time, leaving many prognosticators with a bit of explaining to do. Just last summer, it was thought the Fed would begin raising interest rates closer to spring yet few think such a move is likely at this time.
The big news last week was the expected move by the European Central Bank. The ECB announced, finally, their anticipated quantitative easing program, or QE. The ECB will begin purchasing around $70 billion ($60 Euro) in bonds each month starting in March of this year and continuing into 2016. The ECB is counting on raising the inflation rate to a 2.00% annualized target while at the same time getting the Euro closer to the Dollar.
While the Euro has fallen against the Dollar in recent weeks, it’s still a bit on the heavy side. A drop in the Euro makes exports less expensive and could, theoretically at least, boost economies.
This week there are several economic reports that could affect rates. Durable Goods orders start the week off followed by a much anticipated initial estimate of Q4 GDP on Friday.
The Q3 GDP account came in much stronger than expected at 5.00%. Analysts are looking for a number closer to 3.4%. Anything closer to 4.00% should start a rebound on Wall Street and more than likely hurting mortgage rates in some fashion.
The FOMC also meets this week but there should be no movement regarding raising interest rates at this time. For now, rates should remain in a tight range until Friday when the initial Q4 GDP number is released.