Mortgage rates haven’t done much lately, but they are at least moving in the right direction for home buyers.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to 4.51 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.53 percent a week ago and 3.86 percent a year ago. The 30-year fixed rate has fallen for four weeks in a row but has remained in the same narrow band for the entire summer.
The 15-year fixed-rate average dropped to 3.98 percent with an average 0.5 point. It was 4.01 percent a week ago and 3.16 percent a year ago. The five-year adjustable rate average fell to 3.82 percent with an average 0.3 point. It was 3.87 percent a week ago and 3.17 percent a year ago.
“Mortgage rates have hit the late-summer doldrums, holding steady over the past week and remaining almost exactly where they stood a month ago,” said Aaron Terrazas, senior economist at Zillow. “Financial markets are typically quiet in the final weeks of August, and there was very little major economic news to jolt their trajectory. … New-home sales data, which typically doesn’t move the market, could spook fears of a slowing housing market if they disappoint.”
Existing-home sales data, which was released earlier this week, did disappoint. Sales declined 0.7 of a percent in July, marking the fourth month in a row of declines and the longest slump since 2013. Rising prices and higher mortgage rates have put a damper on the market.
“It is clear affordability constraints have cooled the housing market, especially in expensive coastal markets,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Many metro areas desperately need more new and existing affordable inventory to break out of this slump.”
The Federal Reserve expressed its concerns about the housing market this week. In the minutes from its July 31-Aug. 1 meeting, which were released Wednesday, the central bank noted that home building had eased. Higher mortgage rates, scarcity of land, delays in building approvals, labor shortages and tariffs are contributing to the problem. The Fed noted that “wide-ranging tariff increases . . . included the possibility of a significant weakening in the housing sector.”
The minutes also signaled another rate hike next month. Because the market already anticipates the move, it is unlikely to affect home loan rates much.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that nearly two-thirds of the experts it surveyed say rates will remain relatively stable in the coming week. Shashank Shekhar, chief executive of Arcus Lending, is one who predicts rates will hold steady.
“Mortgage rates will remain the same,” Shekhar said. “Weekly fluctuations notwithstanding, mortgage rates this week are exactly at the same point where they were in mid-April. After a sudden hike at the beginning of the year, we are now in the fourth month of stable rates. That shouldn’t change this week. If anything, President Trump’s potential problems with [Paul] Manafort and [Michael] Cohen can be a reason to park money in safe instruments like bonds, which usually help lower the mortgage rates.”
Meanwhile, four weeks of declining rates finally caused applications to reverse their downward slide, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — increased 4.2 percent from a week earlier. The refinance index jumped 6 percent from the previous week, while the purchase index rose 3 percent.
The refinance share of mortgage activity accounted for 38.7 percent of all applications.
“After several weeks of declining application activity, both purchase and refinance applications increased last week,” said Joel Kan, an MBA economist. “Refinance applications, partially helped by the rate decrease, led the way with a 6 percent increase over the week but were low by historical standards and 33 percent below this time last year. Purchase applications increased almost 3 percent and were up a bit compared to last year, but were still below their 2018 average due to persistent problems of affordability and low inventory.”
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