The average 30-year fixed-rate home loan rate dropped to 4.32% this week, according to data released by Freddie Mac on Thursday. That's down from 4.5% in last week's Freddie Mac survey, and below a peak of 4.58% last month.
The average 15-year fixed rate fell to 3.37% from 3.54% a week ago, Freddie Mac reported.
Interest rates have fallen since the Federal Reserve said Sept. 18 it would continue its $85 billion in monthly bond buying, which is aimed at keeping rates down for consumers and businesses.
Before that announcement, rates had risen more than a full percentage point since early May when markets began speculating on the Fed easing its bond purchases this fall.
Rates are likely to fall below 4%, said Chris Flanagan, head of mortgage research for Bank of America Merrill Lynch.
The higher interest rates in effect over the summer are believed to helped home sales, spurring buyers to close deals and beat further rate increases. August's existing home sales were the highest in six and a half years, the National Realtors Association says.
But newer data is mixed on whether those higher rates are holding some buyers back.
The National Association of Realtors reported Thursday that contracts to buy and sell existing homes dropped 1.6% in August, the third straight monthly decline in its pending home sales index. The index is designed as an indicator of future sales, which are typically close a month or two after contracts are signed.
But the Mortgage Bankers Association weekly reports have noted a pickup in new applications for loans tied to home sales, which the trade group reports separately from refinancing loans.
The Mortgage Bankers Association on Wednesday reported a 7% increase in purchase-money applications last week, following a 3% jump the week before.
Source: http://www.usatoday.com/story/money/business/2013/09/26/pending-home-sales-mortgage-rates/2867341/