(WASHINGTON) — The average 30-year fixed rate mortgage fell to 4.37 percent for the week ending July 18, as Federal Reserve Chairman Ben Bernanke helped ease market concerns about the U.S. central bank tapering its monthly $85 billion bond purchases.
The 30-year fixed rate was 4.51 percent the previous week and 3.53 percent a year ago. The 15-year fixed rate mortgage averaged 3.41 percent, down from last week’s 3.53 percent. A year ago at this time, the 15-year fixed rate mortgage averaged 2.83 percent.
During a question and answer session following a speech last week, Bernanke indicated that the U.S. economy still needed a “highly accommodative monetary policy.”
In testimony before U.S. lawmakers on Wednesday, Bernanke seemed to be more careful with his tone, understanding the effect of his words on investors.
“Uncle Ben is firmly in control and will do everything in his power to keep the economy moving,” said Martin Leclerc, principal, chief investment officer and portfolio manager of Barrack Yard Advisors in Bryn Mawr, Pa. “His testimony did nothing to change that view.”
Bernanke testified before the House Financial Service Committee on Wednesday, saying that the Federal Reserve had no firm timeline to scale back its stimulative policies. He is testifying before the Senate Banking Committee on Thursday.
“Rising asset prices are theoretically creating a wealth effect that will hopefully spill over into the real economy,” Leclerc said. “To keep this momentum going, assume easy money days are not over.”
Frank Nothaft, Freddie Mac’s vice president and chief economist, said, “Indications of a slowing in the economic recovery also placed downward pressure on mortgage rates.”
Nothaft pointed to consumer sentiment, which fell to a three-month low in July. On Monday, the Commerce Department reported retail sales in June grew by only 0.4 percent, half of the market consensus forecast. In addition, housing starts fell in June to the slowest pace since August 2012, the Commerce Department reported on Wednesday.
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Jill Disis, CNN
Jose Pagliery, CNN
Kathryn Vasel, CNN