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Mortgage Rates Sink to Pre-‘Taper Tantrum’ Levels

percentage-lowA slide in 10-year Treasury yields dragged fixed mortgage rates to their lowest point in more than a year and a half, according to the latest weekly survey from Freddie Mac.

Freddie reported Thursday that the average interest rate for a 30-year fixed-rate mortgage (FRM) fell to 3.73 percent (0.6 point) in the last week, a decline of 14 basis points from the end of 2014. The 30-year fixed started off last year at an average 4.51 percent.

This week's decline puts average interest rates at their lowest level since May 2013, when they took off on hints from former Federal Reserve Chair Ben Bernanke that the central bank may soon start to taper its monthly bond-buying program.

Analysts at Bankrate.com attributed the latest downswing to ongoing concerns about how the global economy is faring, particularly in the eurozone. The site's own weekly survey put the 30-year fixed at an average 3.85 percent, down from just under 4 percent a week ago.

"Financial markets have been jittery as investors mull the continued decline in oil prices, and what that says about the weakness of the global economy," Bankrate said in its survey.

Meanwhile, Freddie Mac recorded a 10-basis point drop in the 15-year FRM, bringing it to an average 3.05 percent (0.5 point).

Adjustable rates came down, as well. The 5-year hybrid adjustable-rate mortgage (ARM) came in at an average 2.98 percent (0.5 point) in Freddie's survey, just down from 3.01 percent. The 1-year ARM fell to an average 2.39 percent (0.4 point).

While problems abroad may continue to put a cap on mortgage rates, movements in the next week could be more moderate, owing to what's anticipated to be a fair jobs report on Friday. Economists expect the U.S. economy added about 245,000 jobs in December, with predictions ranging from 202,000 as high as 305,000.

In a release on Wednesday, ADP reported that private payrolls increased by 241,000 last month.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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