Mortgage rates continued to retreat this week, pushed down by global financial concerns.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average dropped to 4.53 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.59 percent a week ago and 3.89 percent a year ago.
The 15-year fixed-rate average fell to 4.01 percent with an average 0.5 point. It was 4.05 percent a week ago and 3.16 percent a year ago. The five-year adjustable rate average slipped to 3.87 percent with an average 0.4 point. It was 3.9 percent a week ago and 3.16 percent a year ago.
“Mortgage rates fell last week driven by financial market flight to safety as the Turkish lira plummeted,” said Aaron Terrazas, senior economist at Zillow. “Economic developments there typically do not pose broader risks, but the shock waves were larger now for two reasons: concern about the exposure of European banks to Turkish assets and the developments coming with little other news to move markets. Beyond international news, financial markets are likely to watch U.S. housing market data due over the next week. The housing market has been strong for much of the economic recovery, but recent soft home sales numbers have spooked markets and prompted fears of a broader economic slowdown. July data should provide greater clarity on the health of the U.S. housing market and its implications for the broader economy.”
Rising home prices and mortgage rates have started to put a damper on the housing market. Sales remain strong in the Washington region, but affordability continues to be a concern.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that two-thirds of the experts it surveyed say rates will remain relatively stable in the coming week. Jim Sahnger, a mortgage planner at C2 Financial, is one who expects rates to hold steady.
“From an economic data perspective, there has been a lot of mixed numbers that point to strength in some areas and not so much in others,” Sahnger said. “That, in conjunction with continued tariff tensions and the latest news out of Turkey, leads to not much action in the bond market or mortgage rates. Look for rates to hold tight.”
Meanwhile, fewer people are applying for a mortgage as applications continued their downward slide, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — decreased 2 percent from a week earlier. The refinance index was unchanged from the previous week, while the purchase index fell 4 percent.
The refinance share of mortgage activity accounted for 37.6 percent of all applications.
“The drop [in mortgage applications] was led by weak purchase-application activity, as it declined for the fifth straight week to its lowest level since Feb 2018 and was also down more than 3 percent from the same week a year ago,” said Joel Kan, an MBA economist. “Refinance applications, however, were flat over the week, held up by an increase in VA refinances.”
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