Continued speculation surrounding the Federal Reserve's bond purchase program drove long-term mortgages rates down this week, according to reports from ""Freddie Mac"":http://www.freddiemac.com/ and ""Bankrate.com"":http://www.bankrate.com/.[IMAGE]
Freddie Mac's weekly updated Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaging 4.51 percent (0.7 point) for the week ending August 29, down from 4.58 percent the prior week. A year ago at this time, the 30-year FRM averaged 3.59 percent.
The 15-year FRM this week averaged 3.54 percent (0.7 point), down from 3.60 percent previously.
Meanwhile, adjustable rates were mixed. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.24 percent (0.5 point) this week, up from 3.21 percent. The 1-year ARM was an average 2.64 percent (0.4 point), a slight slip from 2.67 percent.[COLUMN_BREAK]
Frank Nothaft, VP and chief economist at Freddie Mac, noted the decrease in fixed rates was likely the result of disappointing numbers for new home sales in July.
""The Fed is monitoring the housing market closely after the run up in mortgage rates over the past few months. The 13.4 percent drop in new home sales in July led financial markets to speculate whether the Fed might delay reducing its bond purchases and allowed long-term bond yields and fixed mortgage rates to decline over the week,"" Nothaft said.
In its weekly national survey, Bankrate reported a substantial decline in the 30-year fixed average to 4.62 percent from last week's two-year high of 4.74 percent. The 15-year fixed also fell, averaging 3.66 percent from 3.75 percent previously.
Bankrate's 5/1 ARM average also saw a significant drop, falling to 3.61 percent from 3.69 percent.
While Bankrate also pointed to new home sales as a factor in this week's rate movements, developments abroad may have figured in, as well.
""Weak economic reports on new home sales and durable good orders, coupled with nervousness about a potential military strike against Syria helped drive mortgage rates lower,"" Bankrate said in a release. ""Any time there is nervousness in financial markets, investors gravitate to the safety of U.S. government debt, to which mortgage rates are closely related.""