Weak GDP Numbers Drive Mortgage Rates Down

National mortgage rates for the week ending June 26 dropped across the board, according to the weekly update released today by Freddie Mac.

Thirty-year fixed-rate mortgages, or FRMs, declined by three basis points to 4.14%. Fifteen-year FRMs dropped eight basis points to 3.22%. One year ago, 30-year FRMs cost 4.46% and 15-years cost 3.50%.

The report said 5/1 adjustable-rate mortgages, or ARMs, shed two basis points to hit 2.98%. One-year ARMs slipped a single basis point to 2.40%. A year ago, 5/1 ARMs were at 3.08% and one-year ARMs at 2.66%.

On the sticker price front, Nothaft noted that "on a year-over-year basis, [home] prices remained strong in April up 10.8 percent, but slower than the 12.3 percent in March." Weakness in pricing may be starting to show up, too, with "the seasonally adjusted S&P/Case-Shiller 20-city home price index ... up only 0.2 percent in April from the previous month."

Freddie Mac Vice President and Chief Economist Frank Nothaft attributed the falling rates, in part, to "the release of [the government's] first quarter real GDP final estimate, which fell at a 2.9 percent annualized rate, a steeper than expected decline and the worst reading since the first quarter of 2009." A weaker economy generally means less disposable income for would-be homebuyers, and tends to drive prices -- and mortgage rates -- down.

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