Mclean, VA, August 9, 2006--Mortgage rates dropped again during the week ended August 3 and August 4, and with the announcement on August 8 that the Federal Reserve has, for the moment at least, stopped its regular lock step quarter-point increases in the federal funds rate, there is reason to hope that home mortgage rates will continue to ease.
In a press release on Tuesday, the Federal Reserved stated that "Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices."
"...the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, (these pressures) seem likely to moderate over time."
Thus after hiking the rate at every meeting since June 2004, the Fed opted to leave the federal funds rate at 5-1/4 percent, at least until its next meeting in September.
The federal funds rate only indirectly impacts mortgage rates, but the expectation that the Federal Reserve would pause if not halt increases has been cited as one factor in the easing of mortgage rates the last two weeks.
Freddie Mac in its Weekly Primary Mortgage Market Survey reported that the 30-year fixed-rate mortgage had dropped 9 basis points to 6.63 percent with fees and points unchanged at 0.3. This is the lowest average rate since the week ended June 15. The 15-year fixed-rate mortgage dipped from 6.34 percent to 6.27 percent and fees and points were also down from 0.4 to 0.3.
