After a slight increase last week, mortgage rates sunk to record lows this week, according to the latest data released Thursday by Freddie Mac.
The 30-year fixed-rate average fell to an all-time low 3.66 percent, down from 3.71 percent last week. This time last year, the average was 4.5 percent.
The 15-year fixed-rate average remained below 3 percent, also dropping to a record-low 2.95 percent. Last week, it was 2.98 percent. A year ago, it was 3.69 percent.
“Treasury bond yields eased somewhat this week on some worsening economic indicators bringing mortgage rates back into record-low territory,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.
Nothaft cited several economic factors for the decline: Industrial production was down in two of the previous three months; consumer sentiment fell in June to its lowest level this year, according to a University of Michigan survey; and, in its Wednesday monetary policy announcement, the Federal Reserve noted growth in employment had slowed in recent months and household spending appeared to be rising at a somewhat slower pace. On Wednesday, the Fed extended “Operation Twist” through the end of the year. The program is designed to push economic growth by reducing long-term interest rates.
With mortgage rates rising slightly the previous week, the Mortgage Bankers Association reported Wednesday that the number of applications for mortgages fell. The Market Composite Index, a measure of mortgage loan application volume, dropped 0.8 percent on a seasonally adjusted basis from one week earlier.
“Refinance volume increased again last week, but the composition of activity changed markedly,” Michael Fratantoni, MBA’s vice president of research and economics, said in a statement. “Despite rates remaining near all-time lows, conventional refinance application volume declined, and the [Home Affordable Refinance Program] share of refinance activity dropped to 20 percent. On the other hand, FHA refinance volume exploded to an all-time high, more than doubling over the week.”
The refinance share of mortgage activity continues at a robust pace, rising to 81 percent of total applications.