Mortgage Rates Slip from Poor Q1 Growth

News of worse-than-expected first-quarter economic growth brought fixed mortgage rates down this week, according to market reports.

In its weekly Primary Mortgage Market Survey,Freddie Mac recorded the average 30-year fixed rate at 4.29 percent (0.7 point) for the week ending May 1, down from 4.33 percent. Last year, the 30-year rate was down at 3.35 percent.

The 15-year fixed-rate mortgage (FRM) averaged 3.38 percent (0.6 point), meanwhile, a single basis point down from last week.

Freddie Mac’s chief economist, Frank Nothaft, pinned the declines on disappointing numbers for gross domestic product (GDP) in the first quarter. According to the government’s advance estimate, the economy expanded at a rate of 0.1 percent last quarter, well short of market forecasts.

On the other hand, average rates for both 5- and 1-year adjustable rate mortgages (ARMs) slid up, with the former rising to 3.05 percent (0.4 point) and the latter barely climbing to 2.45 percent (0.5 point).

Bankrate.com’s weekly national survey mirrored Freddie Mac’s, with the 30-year fixed average coming down to 4.44 percent and the 15-year fixed falling to 3.51 percent. The financial news site also reported a rise in the 5/1 ARM, which was up slightly to 3.35 percent.

While Bankrate also cited this week’s GDP report as a reason for distress, analysts added that “both the temperatures and the broader economy are starting to warm up.”

“The Federal Open Market Committee gave a nod to a pickup in economic activity and household spending, and maintained the tapering of bond purchases by scaling back an additional $10 billion in monthly purchases,” Bankrate said. “With the Fed avoiding any market-unsettling surprises, the focus now turns to the monthly jobs report.”