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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Feb 8, 2021

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All three home loan interest rates decreased over 10 base points this week according to reports provided by

For the week ending July 18, 2013,’s interest rate reports show that the 30-year fixed-rate mortgage (FRM) averaged 4.22 percent, a large decrease from 4.41 percent reported last week.

The 15-year FRM averaged 3.28 percent. Last week the rate was 3.41 percent.

The 5/1 adjustable-rate mortgage (ARM) interest rate averaged 3.21 percent, a decrease from last week’s rate of 3.36 percent.

Jordan Roth, senior branch manager at GFI Mortgage Bankers, said that a general consensus on a macro level is that both Fannie Mae and Freddie Mac are way ahead of themselves with the reported home loan interest rates. In the past few months, these institutions’ rates have increased over 100 base points. He said that many portfolio lenders’ rates have only increased between 25 and 50 base points.

The spike in interest rates is an outcome of the Fed’s announcement last month about reducing and then eliminating bond purchases. A recent meeting held to discuss how the plan would be implemented estimates that monthly purchases will decrease initially from $85 billion to $65 billion.

But those estimates could change if the measure is deemed too drastic. If purchases decrease rapidly, it could negatively impact the housing market.

“We can just file back into another economic downturn, which is the last thing anyone wants,” Roth said.

In addition, the housing market continues to be tight because of low inventory. The Department of Commerce reported that housing starts fell in June — the lowest number since August 2012.  As mortgage rates increase, Roth said it will prevent “greater segments of the population from owning a home.”

Despite fears that the housing market will be hurt from the rising home loan interest rates, the CEO of Prudential Alliance Realty in Oklahoma, Shel Detrick, said that effects have not slowed down consumers yet.

After the increase in mortgage interest rates, Detrick expected an interest rate shock. Instead, all he saw was the opposite — an “interest rate reality.”

Buyers are still acquiring new mortgage loans for homes, despite a staggering increase from the low 3 percent rates seen in early 2013, and the mid 4 to 5 percent seen now.

“The market is still as robust as it was 90 days ago when it was 3 percent,” he said.

Detrick said buyers view the current rates and the limited inventory as an “urgency and a call to action.” Additionally, borrowers fear that rates will climb to 6 or 7 percent. But he questions how long the momentum can last.

“If 5 percent didn’t slow the velocity of homebuyer activity, what number will? Is it six? Is it seven?” he asked.