Mortgage rates dip from last week

Mortgages rates slipped this week, even as the S&P 500 Index and the Dow Jones Industrial hovered around record highs.

The reported decline comes just a day after a Federal Reserve official said that the Fed could begin to wind down its stimulus program as early as this summer and end it altogether sometime late this year.

Rates on 30-year fixed-rate mortgages averaged 3.54 percent with an average 0.8 point for the week ending April 4th, down from 3.57 percent last week, and 3.98 percent a year ago, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. Rates on 30-year fixed-rate loans hit a low in Freddie Mac records dating to 1971 of 3.31 percent during the week ending Nov. 21, 2012.

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For 15-year fixed-rate mortgages, rates averaged 2.74 percent with an average 0.7 point, down from 2.76 percent last week and 3.21 pecent year ago. Rates on 15-year fixed-rate loans hit a low in Freddie Mac records dating to 1991 of 2.63 percent during the week ending Nov. 21, 2012.

For five-year Treasury-indexed hybrid-rate mortgage (ARM) loans, rates averaged 2.65 percent with an average 0.5 point, down from 2.68 percent last week and 2.86 percent a year earlier. Rates on five-year Treasury-indexed hybrid-rate mortgage (ARM) loans hit an all-time low the week ending March 21 of this year, averaging 2.61 percent.

Rates on one-year Treasury-indexed ARM loans averaged 2.63 percent with an average 0.4 point, virtually unchanged from last week, but down from 2.78 percent a year ago. Rates on one-year ARM loans hit a low in records dating to 1984 of 2.52 percent during the week ending Dec. 20, 2012.

Looking back a week, applications for purchase loans stayed mostly flat for the week ending March 29, edging up a seasonally adjusted 1 percent from the previous week, according to a separate survey by the Mortgage Bankers Association. Without seasonal adjustment, purchase applications rose 2 percent during the same week, and were up 4 percent year over year.

The S&P 500 Index and Dow Jones Industrial have hovered near record highs recently, appearing to indicate that fears over Cyprus' financial crisis are receding.

But hopes of accelerating growth were slightly tempered this week by a jobs report released yesterday that showed the economy added fewer jobs in March than expected, posting the smallest month-over-month gain since October. Today, the Labor Department reported that jobless claims hit a four-month high in the week ending March 30.

As the economy trudges towards a recovery, investors continue to keep a close eye on the Federal Reserve's monthly purchases of $40 billion in mortgage-backed securities and $45 billion in long-term Treasurys. The purchases are part of a stimulus program called QE3 (the third round of "quantitative easing") that is designed to keep rates low and encourage borrowing.

The Federal Open Market Committee said in March that it continued to see "downside risks" to the economic outlook, and decided to continue QE3. That came as no surprise to investors.

But John Williams, president of the Federal Reserve Bank of San Francisco, said yesterday that the Fed could begin to wind down QE3 by the summer, and potentially end the program before next year. His statement offered the clearest timetable for QE3 that has been disclosed by a Fed official, MarketWatch reported.