In May, mortgage rates began to surge as the Federal Reserve warned that it could soon taper it large-scale asset purchase program, which included the purchases of $US85 billion worth of Treasury Securities and mortgage-backed bonds.
This was putting pressure on the U.S. housing market, where home sales decelerated.
However, rates have actually been pulling back a bit in more recent weeks, and they fell further after the Fed announced it would delay its taper.
According to Freddie Mac the average 30-year fixed mortgage rate fell to 4.32% during the week ending September 26. This is a nine-week low.
It’s down from 4.50% during the prior week. However, it’s still up from 3.40% a year ago.
“Mortgage rates fell following the Federal Reserve announcement that it will maintain its bond buying stimulus,” said Freddie Mac’s Frank Nothaft. “These low rates should somewhat offset the house price gains seen the last number of months and keep housing affordability elevated. For instance, the S&P/Case-Shiller 20-city composite house price index rose 12.4 per cent over the 12-months ending in July, which represented the largest annual increase since February 2006. In addition, more than half of the cities had annual growth exceeding 10 per cent and four cities saw increases exceeding 20 per cent.”
Here’s the chart from Freddie Mac: