Rate Hits Low Unmatched Since 1951

Freddie Mac found the latest drop in the 30-year rate brought it to a level that the Federal Housing Administration suggests may have last been seen in 1951 and recent Fed statements suggest more possible downward pressure could be seen.

Although Freddie Mac’s survey for 30-year loans started only in 1971, it has FHA data going back to 1948 showing long-term rates have been not only been at survey record lows, but lows that pre-date Freddie Mac’s formation in 1970 by decades.

Rates could fall even further. Freddie Mac deputy chief economist Amy Crews Cutts told this publication Fed officials’ recent indication that they’re open to the idea of purchasing more securities-likely Treasuries-has likely contributed to downward pressure on rates and may continue to.

But she warned that there also is the possibility that Fed officials may not take further action. “Sometimes they can simply say something and then they don’t have to do anything because they’ve gotten the market to move,” she said.

If the Fed does buy more securities, it could put downward pressure on rates determined by the extent and speed of the purchases—factors that had not been discussed or signaled at press time. If the recent history of Fed securities purchases is any guide, the move will be well-signaled and do little to disrupt the market, and could be followed by a period of moderation and perhaps a slight increase in rates if the Fed were to withdraw from the purchases.

During the week ending Oct. 14, the average 30-year rate fell to 4.19% from 4.27% the previous week and 4.92% a year ago. The 30-year rate has been below 5% for 23 weeks in a row. Average points on 30-year loans, however, are higher than for any other loan product tracked by Freddie Mac except for one-year ARMs-which match it—at 0.8.

The average 15-year rate during the week ending Oct. 14 was 3.62% with average points at 0.7, down from 3.72% the previous week and 4.37% a year ago.

The average five-year Treasury-indexed hybrid rate during the week ending Oct. 14 was 3.47%, the same as the previous week and down from 4.38% a year ago. These loans’ points averaged 0.6 in the latest week.

The average rate for a one-year Treasury adjustable-rate mortgage was 3.43% in the latest week, up from 3.40% the previous week but down from 4.60% a year ago.