Mortgage Rates Fall Amid Uncertainty In Global Markets
Mortgage rates slid for the sixth straight week, driven down nearly to last year’s low by continued uncertainty and volatility in the global financial markets.
Despite the Federal Reserve’s move to raise interest rates, mortgage rates shifted in the opposite direction. That’s because they’re tied to yields in 10-year Treasury bonds, which have plummeted to their lowest level since 2012. With uncertainty in global markets, investors have flocked to the safer 10-year Treasury bonds, which has resulted in lower yields.
According to the latest data released recently by Federal Home Loan Mortgage Corp., or Freddie Mac, the 30-year fixed-rate sank to 3.65 percent with an average 0.5 point, the lowest level since April. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.72 percent a week ago and 3.69 percent a year ago.
The 15-year fixed-rate average fell to 2.95 percent with an average 0.5 point. It was 3.01 percent a week ago and 2.99 percent a year ago.
The five-year hybrid adjustable mortgage average dipped to 2.83 percent with an average 0.4 point. It was 2.85 percent a week ago and 2.97 percent a year ago.
With mortgage rates falling, a typical family buying a median-priced home now would save approximately $40 a month on their mortgage payment and more than $600 in interest payments on a 30-year fixed-rate mortgage over the course of a year compared with what they would have paid at the start of 2016, according to Freddie Mac.
“The 30-year mortgage rate dropped another 7 basis points this week to 3.65 percent. This week’s drop leaves the mortgage rate just 6 basis points above last year’s low of 3.59 percent,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“In a falling rate environment, mortgage rates often adjust more slowly than capital market rates, and the early-2016 flight-to-quality has run true to form,” Becketti added. “The 30-year mortgage rate has dropped 36 basis points since the start of the year, while the yield on the 10-year Treasury has dropped 59 basis points over the same period. If Treasury yields were to hold at current levels, mortgage rates might well sink a little further before stabilizing.”
Meanwhile, the lower rates may be spurring more home buyers to take advantage of lower-cost loans. Mortgage applications were up, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume rose 9.3 percent from the previous week. The refinance index jumped 16 percent from the week before, while the purchase index ticked up 0.2 percent.
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The refinance portion of mortgage activity accounted for 61.2 percent of total applications, a slight increase from the week before.
By Dion Haynes, Washington Post