Average mortgage rates fell for a second consecutive week nearly returning to 2012 record lows reached on July 26. Negative indications for economic growth and Federal Reserve policy decisions continued to influence mortgage borrowing rates during the September 7 week.
The two week descent appears to be in consensus with sentiment from the Federal Reserve's July 31 - August 1 FOMC policy meeting which stated an overall deceleration in the economy's growth in the first half of the year. The FOMC kept the federal funds rate unchanged at 0.00 to 0.25 percent and reported that this target rate was expected to remain through 2014. The Committee also stated it would continue with its maturity extension program through the end of the year.
The same sentiment was expressed in Chairman Ben Bernanke's Jackson Hole speech on August 31 which further reiterated the Federal Reserve's plans to keep interest rates low and continue the use of the maturity extension program to provide lower long-term borrowing rates.
In concurrence with the market's sentiment, Freddie Mac's September 6 Primary Mortgage Market Survey showed a decline in average 30-year fixed-rate mortgages for the week. The 30-year FRM fell 4 basis points from the previous week to 3.55 percent and was down 11 basis points from the August peak of 3.66 percent.
The average 15-year fixed-rate mortgage remained unchanged at 2.86 percent after falling 3 basis points last week.
Despite the decrease in rates, mortgage applications continued to decline as the housing market enters its off-peak season. Mortgage applications fell 2.5 percent for the week, according to the Mortgage Bankers Association's Weekly Application Survey. Refinancings also decreased, falling by 3 percent but remaining at 79 percent of total mortgage volume, consistent with the previous week.
The average contract rate reported by the Mortgage Bankers Association for
