Fed strategy pushes rates lower, mortgage apps higher

Moving into a new home became even more affordable within the past week, thanks in part to federal actions which helped spur purchasing activity.

Last week, the Federal Reserve announced it would purchase $600 billion in Treasury bonds in an attempt to lower interest rates even further and stimulate the economy. The strategy allowed average rates on 30- and 15-year fixed-rate mortgages to set new record lows, according to Freddie Mac. The average interest on a 30-year FRM dropped to 4.17 percent, while the rate on a 15-year mortgages was down to 3.57 percent. Five-year adjustable-rate mortgages also set a new low, falling to 3.25 percent.

"The quantitative easing is helping to lower interest rates overall, and as a result, the longer-term mortgage interest rates are also falling," Celia Chen, a housing economist at Moody's Analytics, told Bloomberg.

Lower rates have given families another reason to consider moving into a new home, and data from the Mortgage Bankers Association showed that applications for purchase mortgages increased 5.5 percent during the week ending November 5. It could be a sign that more buyers sought financing to take advantage of lower rates.
 

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