Mortgage Rates Steady on Fed Target

Mortgage rates have held mostly steady for the second week in a row, as the market continued to digest mixed economic news and became comfortable with the Fed's rate target, which isn't likely to move any time soon.

Government-backed mortgage buyer Freddie Mac (FRE Quote) said Thursday that long-term rates were mostly unchanged, with adjustable rates falling slightly. Freddie's chief economist, Frank Nothaft, attributed the stability to "offsetting economic data" that showed strong growth in consumer credit, but weak retail sales, indicating that Americans may be simply holding back on purchases, even if they are able to spend more.

Those trends were combined with mixed data for the housing market as well. Signs that home sales may be improving during the typically slow summer months was welcome news for the market.

However, Fed data showed that banks have further tightened lending standards, even for prime borrowers. In other words, even if consumer appetite is strengthening, banks "may dampen further home sales activity going forward," Nothaft says. ...