After a month of increases, mortgage rates reversed course this week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.59 percent, down from 3.66 percent a week ago and 4.22 percent a year ago. Since Aug. 2, rates had been on an uptick.
The 15-year fixed-rate average also declined, going to 2.86 percent from 2.89 percent a week ago. Last year at this time it was 3.39 percent.
Hybrid adjustable-rate mortgages went down as well. The five-year ARM slid to 2.78 percent, down from 2.80 percent the previous week. The one-year ARM dropped to 2.63 percent, down from 2.66 percent a week ago and 2.89 percent a year ago.
According to Frank Nothaft, Freddie Mac vice president and chief economist, lower bond yields led to the drop in mortgage rates.
“Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31st and August 1st minutes of the Federal Reserve’s monetary policy committee,” Nothaft said in a statement. “Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if needed.”
Meanwhile, mortgage applications were down since the recent rate increases. The market composite index, a measure of the loan application volume, fell 4.3 percent from the previous week, the Mortgage Bankers Association reported.
The refinance index was down 6 percent from the prior week to its lowest level since May. The purchase index decreased almost 1 percent from a week ago. The refinance share of mortgage activity dropped to 79 percent from 80 percent a week ago.
Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $2,152 on each loan they originated in the second quarter, up from $1,654 per loan in the first quarter, according to the MBA.
“With the surge in production volume in the second quarter, net production profits among independent mortgage bankers increased, surpassing 100 basis points for the first time since inception of our report in 2008,” MBA associate vice president of industry analysis Marina Walsh said in a statement.
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