The 15-year fixed-rate average was unchanged, holding steady at 2.97 percent with an average 0.8 point. It was 3.81 percent a year ago. The five-year adjustable rate average slipped to 3.28 percent with an average 0.3 point. It was 3.32 percent a week ago and 3.88 percent a year ago.
“Mortgage rates held relatively steady again this week as the markets seem to be reevaluating the level of risk posed by the coronavirus,” said Danielle Hale, chief economist for Realtor.com. “Additionally, testimony from [Federal Reserve] Chairman [Jerome H.] Powell to Congress reinforced the expectation that inflation of the sort that would necessitate a rate hike is not on the horizon.”
Powell testified before Congress on Tuesday that he does not foresee a recession in the near future. He said the U.S. economy is in a “very good place.” He expects solid growth and low interest rates to continue but warned the coronavirus may disrupt the global economy. He also cautioned lawmakers about the size of the federal budget deficit.
“Employment is strong, inflation is low. Stocks around the globe are getting a boost thanks to China signaling more stimulus to promote growth,” said Elizabeth Rose, certified mortgage planning specialist with AmCap Home Loans in Plano, Tex. “It’s worth remembering that bonds are still trading at their best levels since last September. It doesn’t appear they will improve any from here in the near future.”
After falling to 1.54 percent to start the month, the yield on the 10-year Treasury has bounced around, reaching as high as 1.66 percent. It settled in at 1.62 percent on Wednesday. The 10-year Treasury yield is often the best predictor of where mortgage rates are headed. When yields move higher, mortgage rates tend to follow.
“The Fed is on hold, the economy is in good shape, and the coronavirus appears unlikely to have a material impact on the U.S. economy,” said Greg McBride, chief financial analyst with Bankrate.com. “With this backdrop, a slight upward drift in mortgage rates is likely.”
Meanwhile, refinances continued to spur mortgage applications. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 1.1 percent last week. The refinance index rose 5 percent, while the purchase index went down 6 percent.
The refinance share of mortgage activity accounted for 65.5 percent of applications.
“Mortgage applications increased for the third straight week, with the refinance index rising 5 percent to its highest level in nearly seven years,” said Bob Broeksmit, MBA president and CEO. “Lenders in many parts of the country are reporting that low mortgage rates and mild winter weather are also bringing out prospective home buyers. Although purchase applications decreased last week, overall activity is still up an impressive 16 percent from a year ago.”
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