Mortgage rates held near their recent lows this week, with 30-year, fixed-rate loans averaging 3.59 percent.
Last week, the average rate was 3.58 percent. A year ago it was 3.65 percent, according to Freddie Mac.
Policymakers at the Fed raised short-term interest rates in December, causing people to worry that mortgage rates would rise, too. So far they haven’t. Fed Chair Janet Yellen and her team meet next week, but they’re not likely to raise rates again yet.
Why? Yellen & Co. are worried about weakness in overseas economies, including Europe, where central bankers today said they would keep their own interest rates below zero. Negative interest rates, which make saving more expensive than borrowing, are meant to stoke spending and give a lift to the flagging economy.
Cheap borrowing has given a lift to the U.S. housing market, but mortgage rates have been so low for so long that homebuyers don’t feel pressure to sign purchase contracts just because they’re in a rush to lock in low rates.
Home sales rose only modestly last month even though rates flirted with historic lows. That was in part because house hunters couldn’t find anything to buy. The inventory of homes for sale has been retreating for more than a year, leaving buyers in a bind.
Even though the cost of a home loan ticked up slightly this week, mortgages are still really cheap and they’ll probably stay that way for now. Remember this chart.
