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Following Fed decision, mortgage rates fall for second week

Following Fed decision, mortgage rates fall for second week

A number of economic factors, including the U.S. Federal Reserve's decision not to raise short-term interest rates, contributed to a second consecutive week of falling mortgage rates.

According to the weekly mortgage survey from Freddie Mac, average rates on the 30-year fixed-rate mortgage are down for the week ending Thursday, June 16. The average rates on this loan are also significantly lower than the averages seen this time last year. Additionally, average rates on the 15-year fixed-rate and the 5-year Treasury-indexed hybrid adjustable-rate mortgage also fell in the last week and remain below last year's averages.

According to Freddie Mac Chief Economist Sean Becketti, the announcement on Wednesday by the central bank and Fed Chair Janet Yellen not to raise interest rates contributed to investor unease and lower mortgage rates that may continue for the next few weeks.

"The 10-year Treasury yield continued its free fall this week as global risks and expectations for the Fed's June meeting drove investors to the safety of government bonds," Becketti said in a statement. "The 30-year mortgage rate responded by falling 6 basis points for the second straight week to 3.54 percent -- yet another low for 2016. Wednesday's Fed decision to once again stand pat on rates, as well as growing anticipation of the U.K.'s upcoming European Union referendum will make it difficult for Treasury yields and -- more importantly -- mortgage rates to substantially rise in the upcoming weeks."

As NerdWallet noted, Becketti's assessment that mortgage rates will remain low is good news for both first-time home buyers and those seeking to refinance, as many home buyers have already discovered. Home purchase loan applications are 16 percent higher than they were in this same week last year.

At The Federal Savings Bank, we understand the value of owning your own home. Contact our mortgage bankers today to take advantage of historically low mortgage rates in purchasing or refinancing your home.