The 15-year fixed-rate average slipped to 3.56 percent with an average 0.4 point. It was 3.57 percent a week ago and 3.87 percent a year ago. The five-year adjustable rate average dropped to 3.66 percent with an average 0.4 point. It was 3.75 percent a week ago and 3.62 percent a year ago.
After falling a quarter percentage point in two weeks, fixed mortgage rates stabilized as investors moved away from bonds and into equities, buoyed by better-than-expected Chinese manufacturing data and renewed hopes for U.S.-China trade talks. The yield on the 10-year Treasury rebounded to 2.52 percent Wednesday, up from a 15-month low of 2.39 percent last week.
Mortgage rates tend to follow the same path as long-term bonds, although they did not bounce back to the same extent as the 10-year Treasury yield.
“After hitting 14-month lows, rates popped back up a bit this week,” said Jim Sahnger of C2 Financial. “Rates can get bumped around a bit amidst the banter and data. Trade talks caused a bit of optimism for traders, however, economically, numbers are still soft."
Bankrate.com, which puts out a weekly mortgage rate trend index, found half of the experts it surveyed don’t expect rates to move much in the coming week. All eyes will be on the monthly jobs data, which will be released Friday morning.
“If [Friday’s employment report is] worse than expected, we could see a resumption of the rally in bonds we saw in March,” said Michael Becker, branch manager at Sierra Pacific Mortgage. “Remember the rally in rates in March started with last month’s worse than expected employment report. I don’t expect a bad employment report, so I am voting for rates to be flat in the coming week.”
Meanwhile, falling rates continued to juice mortgage applications. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 18.6 percent from a week earlier. Refinances led the way. The refinance index was 39 percent higher from the previous week, reaching its highest level since January 2016. The purchase index climbed 3 percent and was 10 percent higher than a year ago. Purchase applications have risen annually for seven weeks in a row.
The refinance share of mortgage activity accounted for 47.4 percent of all applications.
“Four straight weeks of decreasing mortgage rates helped fuel an 18.6 percent spike in mortgage applications, with refinances jumping 39 percent to the highest level of activity in over three years,” said Bob Broeksmit, MBA president and CEO. “With the spring buying season in full swing, home buyers are responding positively to lower borrowing costs and easing home-price gains.”
The MBA also released its mortgage credit availability index (MCAI) this week that showed credit availability increased in March. The MCAI rose 1.1 percent to 182.1 last month. An increase in the MCAI indicates lending standards are loosening, while a decrease signals they are tightening
“Credit availability increased in March, primarily due to a spike in jumbo mortgage offerings,” Joel Kan, an MBA economist, said in a statement. “The jumbo sub-index increased 5 percent and reached its highest level since last November, as the recent decline in mortgage rates led to a jump in refinances from borrowers with larger loans. The credit supply for government loans decreased in March, as investors continue to reduce FHA and VA streamline refi offerings.”