A day after the Federal Reserve announced it would continue to reduce stimulus spending by another $10 billion, mortgage rates dropped to their lowest level in 2014, according to Freddie Mac.
The average interest for a 30-year fixed-rate mortgage fell to 4.3 percent on Jan. 30. During the previous week, the average rate was 4.39 percent. Interest for a 15-year fixed-rate home loan also declined to an average of 3.4 percent on Jan. 30, down from 3.44 percent the week before.
Mortgage rates may have fallen as a result of a weak home sales report from the Census Bureau. According to the report, the annual rate of home sales dropped to 414,000 units in December 2013, a 7 percent decrease from the previous month. While it is typical for the housing market to slow down during the winter, mortgage applications have remained flat for the past few weeks. Lower rates may help encourage more Americans to apply for a home loan to become a homeowner,
"Mortgage rates eased somewhat as new home sales fell 7 percent in December to a seasonally adjusted pace of 414,000 units, below the consensus," said Frank Nothaft, vice president and chief economist at Freddie Mac. "The S&P/Case-Shiller 20-city composite house price index declined 0.1 percent for the month of November, the first decrease since November 2012."
In addition to fewer sales at the end of the year, home prices appeared to be tapering off, according to the S&P/Case-Shiller Index. In its latest findings, the index showed that home prices were up 13.7 percent on the 20-city composite through November 2013 compared to the previous year. From the previous month however, prices were 0.1 percent lower, a typical result of the winter real estate market. While there was a slight dip in prices, it is likely that the housing market will continue to grow later in 2014.
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