Mortgage Rates in Free Fall, After Fed's Vote

The 30-year fixed-rate mortgage averaged 3.86 percent this week, dropping lower after the Federal Reserve's decision last week to hold off on raising the Federal funds rate.

Read more: Fed Votes to Hold Off on Rate Hike, For Now

"Global growth concerns and lackluster inflation convinced the Fed to defer a hike in the Federal funds rate," says Sean Becketti, Freddie Mac's chief economist. "In response, Treasury yields fell about nine basis points over the week, with some larger day-to-day swings along the way."

That marks nine consecutive weeks that mortgage rates have now remained below 4 percent.

"These low mortgage rates have supported strong home sales, and 2015 is on pace to have the highest home sales total since 2007," Becketti says.

However, on Thursday, Federal Reserve Chair Janet Yellen said the U.S. central bank was on track to raise interest rates this year for the first time in nearly a decade. The Fed's benchmark short-term rate has stayed near zero since December 2008, which has also helped to keep mortgage rates low ever since.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 24:

  • 30-year fixed-rate mortgages: averaged 3.86 percent, with an average 0.7 point, dropping from last week's 3.91 percent average. Last year at this time, 30-year rates averaged 4.20 percent.
  • 15-year fixed-rate mortgages: averaged 3.08 percent, with an average 0.6 point, dropping from last week's 3.11 percent average. A year ago, 15-year rates averaged 3.36 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.91 percent, with an average 0.5 point, dropping from last week's 2.92 percent average. Last year at this time, 5-year ARMs averaged 3.08 percent.
  • 1-year ARMs: averaged 2.53 percent, with an average 0.2 point, dropping from last week's 2.56 percent average. A year ago, 1-year ARMs averaged 2.43 percent.

Source: Freddie Mac and "Fed's Yellen Gets Medical Attention After Struggling With Speech," Reuters (Sept. 24, 2015)