Investors’ jitteriness kept a lid on mortgage rates this week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average held steady at 4.94 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was unchanged from a week ago and up from 3.95 percent a year ago.
The 15-year fixed-rate average rose to 4.36 percent with an average 0.4 point. It was 4.33 percent a week ago and 3.95 percent a year ago. The five-year adjustable rate average also didn’t move, remaining at 4.14 percent with an average 0.3 point. It was 3.21 percent a year ago.
“Despite recent market volatility, mortgage rates remained steady this week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The stability in mortgage rates reflects the moderation in inflationary pressures in the economy due to lower oil prices and subdued wage growth. On the margin, lower energy costs are a positive for the home sales market, particularly for lower-middle income suburban buyers who spend proportionately more income on transportation costs.”
Since mortgage rates jumped to nearly 5 percent a week ago, they have plateaued as long-term bond yields have decreased. The yield on the 10-year Treasury, which tends to be the best predictor of where rates are headed, has been falling the past week.
“A collapse in oil prices and continued stock market volatility prompted some softness in bond markets — primarily driven by the fear that it could spill over into lower inflation, putting expected Fed interest rate hikes on pause,” said Aaron Terrazas, senior economist at Zillow. “Of course, cheaper oil prices could also spur consumer spending as Americans save at the pump. For the time being, markets don’t appear to expect a lasting impact on the American economy from these oil and stock market blips. Moving toward the December [Federal Reserve] meeting, markets are likely to keep a close watch on speeches from several Fed officials, including Chairman Powell.”
Bankrate.com, which puts out a weekly mortgage rate trend index, found that a majority of the experts it surveyed say rates will go down in the coming week. Shashank Shekhar, chief executive of Arcus Lending, is one who predicts rates will move lower.
“The big news this week for mortgage rates was the inflation numbers,” Shekhar said. “The consumer price index came in exactly as estimated at 2.5 percent. Inflationary pressure almost always leads to higher rates for consumers and vice versa. It’s expected that the November CPI numbers will be lower because of a massive decline in oil prices that is driving down the gas prices. With lower inflation rates and very little of any other impactful data, expect mortgage rates to cool down just a tad from recent highs.”
Meanwhile, mortgage applications continued to fall off, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — declined 3.2 percent from a week earlier. The refinance index fell 4.3 percent from the previous week to its lowest level since December 2000. The purchase index dropped 2.3 percent.
The refinance share of mortgage activity accounted for 39.4 percent of all applications.
“Purchase mortgage applications decreased year-over-year for the third straight week and reached their lowest level since February 2017,” said Bob Broeksmit, MBA president and chief executive. “Despite the healthy economy and labor market, prospective home buyers are being slowed by the combination of higher mortgage rates and home prices, inadequate supply levels and, more recently, volatility in the stock market.”
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