WASHINGTON (4/21/14)--The average mortgage rate for 30-year loans sank to 4.27% from 4.34% last week, according to mortgage buyer Freddie Mac, while average 15-year loan rates dropped to 3.33% from 3.38% (USAToday.com April 17).
Despite this second straight week of declines, rates still remain about a point higher than levels realized last year when rates had fallen to record lows on the heels of the economic downturn.
The average rate for one-year adjustable-rate mortgages climbed to 2.44% from 2.41%, while the average five-year adjustable-rate mortgage fell to 3.03% from 3.09%.
Analysts believe the overall increase in mortgage rates may be fueled by the Federal Reserve's decision to taper quantitative easing and reduce its levels of bond purchasing--the central bank's method of driving down rates to stimulate the economy.
New Federal Open Market Committee Chair Janet Yellen announced last week, meanwhile, that the Fed's policymaking body would again reduce its purchasing program this month by $10 billion, and that, barring any unforeseen setbacks, it would continue to reduce purchasing in the coming months.
In other market news, RealtyTrac reported last week that 17% of all residential properties in the U.S. were "seriously underwater" in the first quarter of this year, a 2% decrease from the final quarter in 2013 (Housingwire.com April 16).
That means 9.1 million homeowners across the country owe at least 25% more on their houses than their current market values. Year-over-year, the number of seriously underwater homes is down about 9% this quarter, as 10.9 million properties fell into this category last year at this time.
While equity overall is rising, home price appreciation has lagged, likely meaning that many homeowners in the U.S. still have a long road ahead before attaining positive equity, said Daren Blomquist, RealtyTrac vice president.
Elsewhere, the Labor Department reported last week that median weekly wages expanded faster this past quarter than any other time in the past four years (MarketWatch April 17).
The 2.7% growth rate, seasonally adjusted, was the strongest seen since the end of 2009.