Freddie Mac, the federally chartered mortgage investor, aggregates rates from about 80 lenders across the country to come up with weekly national averages. The survey is based on mortgages for home purchases. Rates for refinances may be different. The survey uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to all borrowers.
The 15-year fixed-rate average fell to 2.12 percent, with an average 0.6 point. It was 2.19 percent a week ago and 2.35 percent a year ago. The five-year adjustable-rate average jumped to 2.51 percent, with an average 0.1 point. It was 2.42 percent a week ago and 2.96 percent a year ago.
“Mortgage rates moved slightly lower this week, barely budging as markets await a signal for a more pronounced move in either direction,” said Matthew Speakman, a senior economist at Zillow. “Rates have stayed basically flat over the past few weeks, and where they head from here is dependent on two key factors: covid-19 cases and potential actions taken by the Federal Reserve.”
The Bureau of Labor Statistics released its consumer price index this week, which showed prices rose 5.3 percent last month in comparison with a year ago. The more modest increase eased fears about inflation.
The yield on the 10-year Treasury fell to 1.28 percent Tuesday after the inflation data was released but rebounded to 1.31 percent Wednesday.
“It seems as though markets are waiting for next week’s Fed meeting before yields break out of this consolidating pattern,” said Michael Becker, branch manager at Sierra Pacific Mortgage. “Markets are trying to figure out if a tapering announcement will be made at the end of this meeting. For now, I think the consolidating pattern will continue.”
The Federal Reserve meets next week, and the markets will be watching to see what significant news, if any, comes out of the meeting. It is possible that the Fed will announce a plan to begin reducing or tapering its bond-buying program. However, after a disappointing jobs report this month and this week’s tame inflation data, few experts expect the central bank to make such an announcement.
“We know that the rate of growth in some of our economic data lines is going to cool down naturally, working from extreme highs,” said Logan Mohtashami, housing analyst at Housing Wire. “If the inflation rate of growth has peaked and the Fed will hold off on the taper, you can make a case that yields should rise as the Fed will delay slowing the economy down until later. However, that discussion is still a way out.”
Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed divided on where rates are headed in the coming week. Half of them expect rates to fall, and 42 percent predict that they will stay about the same.
Greg McBride, chief financial analyst at Bankrate.com, says they will go down.
“The lower-than-expected inflation reading allows the Fed to defer any tapering decision beyond the September 22 meeting and take time in gauging the impact of the delta variant on the economic recovery,” he said.
Jennifer Kouchis, senior vice president for real estate lending at VyStar Credit Union, says rates will hold steady.
“With uncertainty surrounding the delta variant and the economy, I expect things will remain on a sideways trend for now,” she said. “However, as always when we near the Fed meeting, we may see some small upward spikes that I don’t expect to amount to much in the end.”
Meanwhile, mortgage applications were flat last week. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 0.3 percent from a week earlier. The purchase index rose 8 percent, its highest level since April. But the refinance index dropped 3 percent. The refinance share of mortgage activity accounted for 64.9 percent of applications.
“Low mortgage rates and a modest increase in housing inventory are bringing more buyers to the market as summer winds down,” said Bob Broeksmit, Mortgage Bankers Association president and chief executive. “Despite the uptick in housing supply in recent months, swift competition continues to push home prices and average loan balances higher.”
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