Mortgage rates drop; but expect a reversal

Mortgage rates edged downward this week, but don’t take lower rates for granted. The Federal Reserve says it might start withdrawing support from the mortgage market this year.

The central bank has a lot more work to do, though.

“The Fed halting the reinvestment of maturing bond holdings is only dipping a toe into the water of winding down a $4.5 trillion balance sheet,” says Bankrate’s chief financial analyst, Greg McBride. “Does anybody really think the Fed can meaningfully ratchet down a balance sheet of that size before the next economic slowdown comes along? It’s very doubtful.”

Meantime, mortgage rates are likely to rise through homebuying season, making this a good time to jump in and shop for a mortgage.

Mortgage rates this week

The benchmark 30-year fixed-rate mortgage fell this week to 4.24 percent from 4.3 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 3.75 percent. Four weeks ago, the rate was 4.38 percent. The mortgages in this week’s survey had an average total of 0.26 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 3.9 percent. This week’s rate is 0.34 percentage points higher than the 52-week average.

■ The 15-year fixed-rate mortgage fell to 3.48 percent from 3.49 percent.

■ The 5/1 adjustable-rate mortgage fell to 3.45 percent from 3.49 percent.

■ The 30-year fixed-rate jumbo mortgage fell to 4.19 percent from 4.23 percent.

The Fed isn’t all that’s threatening to push mortgage rates higher.

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