Federal ReserveBoard Chairman Ben Bernanke reassured Congress Wednesday that the Fed has no plans to raise interest rates any time soon.
“The federal funds rate is likely to remain exceptionally low for an extended period,” Bernanke told the House Financial Services Committee. Last week’s decision to raise the discount rate charged to banks who tap the Fed for short-term credit was a result of improvements in private-sector sources for such financing, Bernanke said. It should not “lead to tighter financial conditions for households and businesses and should not be interpreted as signaling any change in the outlook for monetary policy,” he said.
That reassurance came as a relief to Wall Street, where stocks advanced on the news, and to most members of Congress.
Rates on 30-year mortgages stayed below 5 percent again this week. The average rate for a 30-year fixed mortgage fell to 4.83 percent, down from 4.91 percent. Last year at this time, 30-year mortgages averaged 6.04 percent. This week the average rate on a 15-year fixed-rate mortgage fell to 4.32 percent and rates on five-year, adjustable-rate mortgages averaged 4.25 percent. According to Freddie Mac, the best rates usually are available only to borrowers with solid credit and a 20 percent down payment.
Long-term mortgages rates moved lower again this week, hitting the lowest level in five weeks.
Freddie Mac’s weekly report says the average 30-year fixed-rate mortgage was 4.91 percent in the week ending Nov. 12, down from 4.98 percent last week. Rates on 30-year mortgages have been below 5 percent for five of the last seven weeks.
A year ago, 30-year mortgages were averaging 6.14 percent.
A 15-year fixed-rate mortgage averaged 4.36 percent this week, remaining below one-year adjustable rate mortgages, which now average 4.46 percent.
“Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance,” said Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. “This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.”
The National Association of Realtors this week said third quarter housing prices were down an average of 11.2 percent from a year ago, but 20 percent of the top metropolitan ares saw positive annual growth.
Sales continue to rise, with third quarter existing home sales up 11 percent from a year ago.