January 8

During the first week of the month, interest rates on 30-year fixed rate mortgages (FRM), as reported by Freddie Mac, fell to 5.01 percent, excluding points, from 5.14 percent the previous week. The average rate on a 15-year FRM dropped to 4.62 percent from 4.91 percent, while the one-year adjustable rate mortgage (ARM) held steady at an average of 4.95 percent.

According to Frank Nothaft, Freddie Mac vice president and chief economist, interest rates on long-term loans fell for the tenth week "in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said.

January 15

As the Fed continued to pump money in to the nation's banks, 30-year FRM loans fell to 4.96 percent in the second week, the lowest rate on record since the 1971 beginning of the Freddie Mac survey. The decrease was attributed to news of rising unemployment as well as generally poor economic indicators.

January 22

The long-term mortgage interest rate jumped up in the third week to 5.12 percent, with Freddie Mac noting that even with the increase, rates had averaged 0.25 percentage points lower during January then they did during the previous month. This allowed many homeowners to refinance out of risky adjustable rate mortgages.

January 29

The month ended with interest rate barely changing during the last week. The average rate on a 30-year FRM loan slipped down to 5.10 percent, while the 15-year FRM remained unchanged at 4.80 percent from the previous week and the one-year ARM dropped to 4.90 percent from 4.92 percent.

What's Next for Interest Rates?

The future of interest rates for February looks volatile but general predictions have rates moving slightly upward. The driving factors may be a mix of reports of high unemployment and the continued debating of the next stimulus package in the House and Senate.