Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national average mortgage rates. It uses rates for high-quality borrowers who tend to have strong credit scores and large down payments. These rates are not available to every borrower.
The 15-year fixed-rate average fell to 2.46 percent with an average 0.7 point. It was 2.54 percent a week ago and 3.06 percent a year ago. The five-year adjustable rate average was unchanged at 2.91 percent with an average 0.2 point. It was 3.31 percent a year ago.
“Mortgage rates remain near historic lows and below year-ago levels,” said Danielle Hale, chief economist at Realtor.com. “Rates are still low enough to continue to drive home buyer demand, but refinancing is becoming attractive to a smaller number of homeowners. This may paradoxically help buyers as they won’t have to compete with as many refinance applicants for lender attention.”
A decision by the Federal Housing Finance Agency earlier this month to raise lender fees on refinances starting Sept. 1 caused an uproar in the industry. Earlier this week, FHFA announced it was delaying implementation of the fee until Dec. 1.
“As often happens, an initial decision made by the government is instituted and then revised based on public and industry commentary,” Paul Buege, president of Inlanta Mortgage in Pewaukee, Wis., wrote in an email. “The FHFA’s announcement last week that there would be an added 50 basis point fee on all refinances backed by Fannie Mae and Freddie Mac was a shocker for both lenders and their borrower clients, as the new fee was instituted by the FHFA in the ‘darkness of the night,’ with no warning. There was no notice that the fee was coming, and it was effective as of Sept. 1, so would cover loans already in process. The real stinger was that the cost would come directly out of the lender’s bottom line. Now with a delay in the fee until Dec. 1st, lenders have the ability to determine the best way to cover the cost while working with their clients.”
Federal Reserve Chair Jerome H. Powell’s speech Thursday morning at an annual economic policy symposium in Jackson Hole, Wyo., is likely to affect mortgage rates. In his address, Powell announced a change in how the central bank views inflation. Instead of trying to keep inflation below 2 percent, the Fed will allow inflation to go above that level if that means more workers stay employed.
Shashank Shekhar, chief executive of Arcus Lending in San Jose, Calif., expects the Fed’s discussion of a new inflation target to influence rates.
“That almost always impacts the pricing of the mortgage bond and hence the rate to the borrowers,” he said.
“Rates should stay the same despite a slight rise in [long-term bond] yields,” said Gordon Miller, owner of Miller Lending Group in Cary, N.C. “Volume continues to exceed demand but nothing in sight to raise rates. Closing costs are out of control, so be cautious.”
Meanwhile, fewer borrowers applied for mortgages last week. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — decreased 6.5 percent from a week earlier. The purchase index was essentially flat, up 0.4 percent from the previous week. The refinance index sank 10 percent but was 34 percent higher than a year ago. The refinance share of mortgage activity accounted for 62.6 percent of applications.
“The sustained boost in home buyer demand observed since early May has carried into late summer,” said Bob Broeksmit, MBA president and CEO. “Purchase applications were up an impressive 33 percent compared to last year and have now risen annually for 14 straight weeks. Although refinance activity declined last week, Tuesday’s Federal Housing Finance Agency announcement directing Fannie Mae and Freddie Mac to delay the implementation of their new 0.5 percent fee on refinance loans to December 1 is good news for homeowners looking to refinance soon.”
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