Fixed mortgage rates sank to new lows for the year this week.
According to the latest data released by Freddie Mac, the 30-year fixed-rate average tumbled to 3.78 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.82 percent a week ago and 3.44 percent a year ago. The 30-year fixed rate hasn’t been this low since early November.
The 15-year fixed-rate average slid to 3.08 percent with an average 0.5 point. It was 3.12 percent a week ago and 2.76 percent a year ago. The five-year adjustable rate average edged up to 3.15 percent with an average 0.4 point. It was 3.14 percent a week ago and 2.81 percent a year ago.
With another potentially catastrophic hurricane bearing down on the United States and global tensions running high with North Korea, investors are apprehensive about the economic impacts of these events. These concerns have whetted their appetite for long-term bonds, driving yields to their lowest levels since the presidential election. The yield on the 10-year Treasury plunged to 2.07 percent Tuesday, falling from a yearly high of 2.62 percent in March.
Because mortgage rates tend to follow the same path as long-term bonds, home loan rates also fell.
Mortgage rates have been in a five-week skid, but some observers expect the downturn is about to halt. About a third of the experts surveyed by Bankrate.com, which puts out a weekly mortgage rate trend index, said home loan rates would remain relatively stable in the coming week. Elizabeth Rose, branch manager of Movement Mortgage in Dallas, is one who says rates will hold steady.
“Bonds thrive on bad news and we have no shortage of not-so-good news and data: back-to-back hurricanes, Korea, inflation, lack of wage growth,” Rose said. “While bonds and rates are at the best levels and could still possibly improve from here with more negative news, it is more likely they will stay the course and remain unchanged.”
Meanwhile, spurred by falling rates, mortgage applications picked up last week, according to the latest data from the Mortgage Bankers Association. The market composite index – a measure of total loan application volume – increased 3.3 percent. The refinance index rose 5 percent, while the purchase index inched up 1 percent.
The refinance share of mortgage activity accounted for 50.9 percent of all applications.
“Heightened geopolitical tensions last week brought mortgage rates to their lowest level since the 2016 election,” said Joel Kan, an MBA economist. “Refinance volume jumped as a result, and for the first time since January, the majority of application volume was for refinances, with the refinance share almost 51 percent.”
(c) 2017, The Washington Post · Kathy Orton