Loans Expert

U.S. mortgage rates fell this week after a month of increases coinciding with the Federal Reserve ending its purchases of home loan debt.

Rates for 30-year fixed loans dropped to 5.07 percent for the week ended today from 5.21 percent, mortgage finance company Freddie Mac said in a statement. The rate touched an eight-month high last week after the central bank on March 31 ended a program to buy $1.25 trillion of mortgage-backed securities.

“There was a little bit of a hiccup,” said Donald Rissmiller, chief economist at Strategas Research Partners in New York. “When the dust is settled, the Fed has been able to back away from the market without too many problems.”

The program helped reduce rates to a record low of 4.71 percent in December. Government bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae, agencies that buy home loans from lenders and package them into securities, brought down yields and allowed lenders to reduce mortgage rates while still selling the bonds at a profit.

This week’s average 15-year rate was 4.4 percent, according to McLean, Virginia-based Freddie Mac.

Investors bought enough mortgage-backed securities to ease yields as the Fed withdrew from the market, Rissmiller said.

The Mortgage Bankers Association’s index of mortgage applications fell 9.6 percent in the week ended April 9. The portion of refinancings dropped 9 percent. Applications to purchase a home slumped 11 percent.

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Tags: Loans, loans fall, mortgage rates