Mortgage Rates Little Changed After Fed Plans to Taper Stimulus

Dec 26, 2013 10:00 am ET

Dec. 26 (Bloomberg) -- Mortgage rates in the U.S. were little changed as lenders absorbed news that the Federal Reserve plans to taper bond purchases that have helped support the real estate market.

The average rate for a 30-year fixed mortgage was 4.48 percent this week, up from 4.47 percent, according to a statement today from Freddie Mac. The average 15-year rate climbed to 3.52 percent from 3.51 percent, the McLean, Virginia- based mortgage-finance company said.

The Federal Open Market Committee said on Dec. 18 that it will trim its monthly asset purchases starting in January, taking the first step toward unwinding the stimulus as the economy strengthens. Mortgage rates have climbed from near- record lows in May on speculation that the central bank would begin scaling back the program.

“Slightly higher rates are unlikely to be enough to derail the housing-market recovery as improvement in labor markets and other economic fundamentals keeps the recovery on track,” Gennadiy Goldberg, U.S. strategist for TD Securities in New York, said in a Dec. 24 e-mail.

New homes sold in November at an annualized pace of 464,000, beating economists’ expectations and holding close to a five-year high, Commerce Department data showed this week.

The average 30-year mortgage rate reached a two-year high of 4.58 percent in August, spiking up from 3.35 percent in May.

Higher rates have reduced demand for refinancing. A measure of applications to cut monthly payments fell 7.7 in the period ended Dec. 20 from the prior week, according to the Mortgage Bankers Association. The index hit its lowest level since 2008 and is down 72 percent from the week ended May 3. The Washington-based group’s purchase measure dropped 3.5 percent last week and is down 24 percent from May 3.

--Editors: Daniel Taub, Christine Maurus