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Mortgage Rates Drop After Rising in Back-to-Back Weeks

US mortgage rates declined this week, with the average rate for a 30-year home loan posting one of the biggest one-week slides of the year. According to a report from government controlled mortgage insurance giant Freddie Mac, the average for the 30-year, a favorite choice for homebuyers, fell from last week's average of 4.35 percent to 4.22 percent. The report showed that the 15-year average fell as well, from 3.35 percent to 3.27 percent. The average for a 5-year adjustable-rate mortgage, or ARM, dropped from 3.01 percent to 2.95 percent, and the average for a 1-year ARM held steady at 2.61 percent.

Interest rates have mostly risen in recent weeks spiking during the summer when speculation was rampant about when the Federal Reserve would end its bond buying program designed to keep rate slow. The program entails the purchase of $80 billion worth of Treasury bills each month by the government. The purchases raise the price of the bonds, while also forcing the yield to drop. Since interest rates track bond yields, specifically that of the 10-year Treasury, the program does end up keeping rate slower. Underscoring the program's effects, the highest average so far this year occurred in August, before the Fed indicated a willingness to wait to pull back stimulus measures.

November 22, 2013