Mortgage rates tumbled for the second week in a row, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average sank to 3.43 percent with an average 0.8 point. It was down from 3.54 percent a week ago and 3.88 percent a year ago. The 30-year fixed rate fell below 3.5 percent for the first time since Jan. 24. Except for a brief spike to 3.63 percent in March, it has hovered around 3.5 percent since late January.
The 15-year fixed-rate average dropped to 2.65 percent with an average 0.7 point. It was 2.74 percent a week ago and 3.11 percent a year ago. The 15-year fixed rate has remained below 3 percent for nearly a year.
Hybrid adjustable-rate mortgages also declined. The 5-year ARM dipped to 2.62 percent with an average 0.5 point. It was 2.65 percent a week ago. The one-year ARM returned to 2.62 percent with an average 0.4 point. It had been at 2.62 percent two weeks ago before rising to 2.63 percent last week.
Frank E. Nothaft, Freddie Mac vice president and chief economist, attributed the drop in mortgage rates to March’s weak employment report.
“The economy added just 88,000 net new jobs last month, about one-third as many as February and the fewest since June 2012,” Nothaft said in a statement. “In addition, approximately 496,000 people left the workforce causing the unemployment rate to fall to 7.6 percent. Further, average hourly earnings were unchanged in March, indicating income growth remains tepid.”
As mortgage rates edged down, mortgage applications picked up, according to the Mortgage Bankers Association.
The Market Composite Index, a measure of loan application volume, rose 4.5 percent from the previous week. The Refinance Index climbed 6 percent, while the Purchase Index dropped 1 percent.
Following weeks of declines, the refinance share of mortgage activity grew last week, accounting for 75 percent of total applications.
“Although total purchase application volume fell last week, there was a significant divergence between the conventional and government markets,” Mike Fratantoni, MBA’s vice president of research and economics, said in a statement. “Following the April 1 increase in FHA mortgage insurance premiums, government purchase applications fell by almost 14 percent, to their lowest level since February 2013. On the other hand, applications for conventional purchase loans increased by more than 5 percent, bringing the conventional purchase index to its highest level since October 2009 and the highest level since the expiration of the homebuyer tax credit. With these changes, the government share of all purchase loans fell to 30 percent, the lowest level since we began tracking this series in 2011.”