Small drop in mortgage rates as the market waited on the Fed

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Mortgage rates held steady in anticipation of the Federal Open Market Committee not increasing short-term rates at its meeting Wednesday, according to Freddie Mac.

The 30-year fixed-rate mortgage averaged 4.02%, down from last week when it averaged 4.03%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.61%.

"The 10-year Treasury yield remained relatively flat this week, as did the 30-year mortgage rate which fell 1 basis point," said Sean Becketti, chief economist at Freddie Mac.

The 15-year fixed-rate mortgage averaged 3.27%, the same as last week. A year ago at this time, the 15-year averaged 2.86%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.13%, up from last week when it averaged 3.12%. At this time last year, it averaged 2.8%.

"Markets have been erring on the side of caution following a weak advance estimate for first-quarter GDP and the FOMC's broadly expected decision to leave rates unchanged," Becketti added.

Becketti, along with his fellow industry economists Mike Fratantoni at the Mortgage Bankers Association and Doug Duncan at Freddie Mac, said at this week's MBA National Secondary Market Conference in New York there should be two more rate hikes coming from the FOMC this year.

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