Falling Mortgage Rates Follow Weak Economic Developments

It’s been a down week for mortgage rates following news of weaker-than-expected economic developments.

Freddie Mac released Thursday the results of its Primary Mortgage Market Survey for the week ending March 6, showing the 30-year fixed-rate mortgage (FRM) falling 9 basis points to an average rate of 4.28 percent (0.7 point). The 30-year FRM kicked off March last year at an average 3.52 percent.

The 15-year FRM averaged 3.32 percent (0.6 point), down from 3.39 percent before.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also retreated slightly, dropping to 3.03 percent (0.4 point), while the 1-year ARM was flat at 2.52 percent (0.3 point).

“Mortgage rates were down this week as real GDP was revised downwards to 2.4 percent growth in the fourth quarter of 2013,” said Frank Nothaft, VP and chief economist at Freddie Mac. “Fixed residential investment negatively contributed to GDP decreasing 8.7 percent in the fourth quarter.”

Bankrate.com’s national survey showed slightly less dramatic movements, but rates were down all the same. According to the finance site’s weekly report, the 30-year fixed average dropped 3 basis points to 4.45 percent, while the 15-year fixed was down 4 points to 3.46 percent.

The 5/1 ARM also declined, falling a few points to 3.26 percent.

“The disappointing economic data hasn’t been so bad as to raise concerns of a sharp economic slowdown—yet—but have been just tepid enough to cast doubt on the idea of the economy suddenly accelerating,” Bankrate said in a release. “So we end up with this Goldilocks scenario of economic growth that isn’t too hot, but isn’t too cold, which has kept bond yields and mortgage rates in check.”