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Fed minutes cause sharp drop in mortgage rates

By Palm Beach Business.com

DELRAY BEACH — After spending most of August moving higher, mortgage rates this week reverted back to what they’ve done most of the year. They fell,  and fell fairly sharply, according to both Freddie Mac and Bankrate.

The 30-year fixed-rate mortgage dropped to 3.59 percent with 0.6 point from 3.66 percent a week ago, according to Freddie Mac’s Primary Mortgage Market Survey. Bankrate’s national mortgage survey put the 30-year at 3.80 with 0.40 point, down from 3.91 percent a week earlier.

"Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31 and August 1 minutes of the Federal Reserve's monetary policy committee,” Freddie Mac Chief Economist Frank Nothaft said. “Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if needed.”

Mortgage rates tend to follow Treasury yields.

The 15-year fixed-rate mortgage also dropped sharply, according to Bankrate, to 3.03 percent with 0.35 point, from 3.11 percent a week ago. Freddie found the drop a little more modest, to 2.86 percent with 0.6 point from 2.89 percent a week earlier.

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