The 15-year fixed-rate average slipped to 3.14 percent with an average 0.5 point. It was 3.16 percent a week ago and 4.15 percent a year ago. The five-year adjustable rate average was unchanged at 3.38 percent with an average 0.4 point. It was 4.01 percent a year ago.
A Commerce Department report late last week showed consumer spending cooled in August. Then, the Institute for Supply Management released its manufacturing index for September, which fell to its lowest level since June 2009. Economists blamed the slowdowns on continued trade tensions, and investors worried the contractions might signal a looming recession.
With investors moving toward safer assets, the price of U.S. Treasurys rose and yields fell. The yield on the 10-year bond dipped to 1.6 percent on Wednesday. Two weeks ago, it was 1.8 percent. Mortgage rates tend to follow the path of the 10-year Treasury but like last month, they haven’t dropped as far.
“A slew of weak economic data stoked fears of an economic slowdown and pushed investors to safer assets,” said Matthew Speakman, a Zillow economist. “Friday’s disappointing consumer spending release and Tuesday’s report on manufacturing activity, which hit a 10-year low, were the most impactful. With September’s jobs report due Friday, markets remain on edge, which will likely bring more significant rate swings.”
“Recession fears are causing money to flow from the stock market into bonds and, as a result, mortgage bonds are benefiting,” said Elizabeth Rose, certified mortgage planning specialist at AmCap Home Loans in Plano, Tex. “From a technical standpoint, breaking through resistance levels to even lower rates may be a long shot; however, there [are] certainly good signals for some small gains within the current range.”
Meanwhile, mortgage applications picked up after rates fell last week. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 8.1 percent from a week earlier. The refinance index jumped 14 percent, while the purchase index ticked up 1 percent.
The refinance share of mortgage activity accounted for 58 percent of all applications.
“Fueled by low rates and solid home-buyer demand, this fall’s mortgage market continues to be busy,” said Bob Broeksmit, MBA president and CEO. “Mortgage applications for both refinances and home purchases increased last week, and the year-over-year gains were even more impressive. With rates expected to stay around 4 percent, overall activity in the final three months of 2019 should stay solidly above last year’s levels, when borrowing costs were much higher.”