Florida Home Loan Rates Fall As Investors Believe Fed’s Rate Hikes May Be Winding Down

With investors feeling a little more hopeful that the Federal Reserve’s long string of interest rate hikes may finally be nearing the end, Florida home loan rates fell by 0.8 percent this week, according to mortgage giant Freddie Mac.

Rates on the industry’s benchmark loans — 30-year, fixed-rate mortgages — slipped to an average of 6.72 percent, down from 6.80 percent a week ago, which marked the highest average in nearly four years, Freddie Mac said. Extremely affordable Florida home loans powered the housing boom we saw from 2001-2005, which pushed homes sales to record levels five consecutive times. But sales are down and the housing market is slumping this year as rates have crept back up.

The Commerce Department reports that sales of new homes fell by 3 percent in June, the biggest drop in four months, with the inventory of unsold homes hitting record highs. Analysts attributed this week’s drop in rates to testimony from Federal Reserve Chairman Ben Bernanke, who told Congress last week that the Fed believed a slowing economy would reduce inflation.

“Mortgage rates drifted lower this week on indications that economic growth is moderating, inflation remains under control and the Fed just may pause raising rates for awhile,” said Frank Nothaft, Freddie Mac’s head economist.

Meanwhile, rates on 15-year, fixed-rate mortgages, a popular choice for those refinancing a Florida home loan, fell to 6.34 percent this week, down from 6.41 percent a week ago. Rates on one-year adjustable-rate loans dropped to 5.78 percent, compared to 5.80 percent last week. Rates on five-year adjustable-rate mortgages declined to 6.35 percent from 6.36 percent.

The mortgage rates quoted above do not include add-on fees known as points. The 5-year and 15-year mortgages carried a nationwide average fee of 0.4 points, while 30-year fixed-rate mortgages had averaged 0.3 points and the one-year ARM carried 0.7 points. A year ago, 30-year mortgages averaged 5.77 percent and 15-year Florida home loans stood at 5.34 percent.