The dovish decision from the Federal Reserve to not raise the federal funds rate caused mortgage interest rates to decline across the board, according to the Freddie Mac Primary Mortgage Market Survey.
The weekly survey from the government-sponsored enterprise noted that the average 30-year fixed-rate mortgage plummeted this week to 3.86% from 3.91%
The average rate also fell week-over-week for 15-year fixed-rate mortgages by three basis points to 3.08%. Last year, the survey reported an average rate of 3.36% for 15-year FRMs. The one-year Treasury-indexed adjustable-rate mortgage similarly declined by three basis points from the week prior to 2.53%.
The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage also dropped from last week, but only by a single basis point, to 2.91%.
Freddie Mac chief economist Sean Becketti noted in a press release that a clear correlation could be drawn between the rate declines and the Fed's announcement.
"Global growth concerns and lackluster inflation convinced the Fed to defer a hike in the federal funds rate," Becketti said. "In response, Treasury yields fell about 9 basis points over the week, with some larger day-to-day swings along the way. In response, the interest rate on 30-year fixed-rate mortgages dropped by 5 basis points to 3.86 percent."
Still, Becketti did not paint this downward turn in a negative light. While rates have remained below 4% for nine consecutive weeks, he reiterated that the low rates have spurred strong home sales, on track to have the highest total since 2007.
