Mortgage rates tumbled amid signs of a weakening economic recovery. After spiking more than a percentage point since early May, they have started to reverse course, according to the latest data released by Freddie Mac. On Wednesday, the Federal Reserve announced that it would leave its bond-buying program intact.
The 15-year fixed-rate average dropped to 3.54 percent with an average 0.7 point. It was 3.59 percent a week ago and 2.77 percent a year ago. The 15-year fixed rate hit its highest level since July 2011, 3.6 percent, a month ago. It has stayed above 3 percent since early June.
Hybrid adjustable rate mortgages also declined. The five-year ARM fell to 3.11 percent with an average 0.5 point. It was 3.22 percent a week ago and 2.76 percent a year ago.
The one-year ARM edged down to 2.65 percent with an average 0.4 point. It was 2.67 percent a week ago.
“Mortgage rates drifted downwards this week amid signs of a weakening economic recovery,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.
“Retail sales rose 0.2 percent in August, which was nearly half of July’s 0.4 percent increase. In addition, industrial production in August grew 0.4 percent, less than the market consensus forecast. And lastly, consumer sentiment fell for the second consecutive month in September to the lowest reading since April.
“This, in part, was why the Federal Reserve chose to maintain its MBS and bond-buying program at its September 12th and 13th monetary policy committee meeting. It also cited the tightening of financial conditions observed in recent months, which in the case of the housing market means the rise in mortgage rates since May.”
Meanwhile, mortgage applications have bounced around the past couple weeks, according to the latest data from the Mortgage Bankers Association.
The Market Composite Index, a measure of total loan application volume, soared 11.2 percent a week after plunging 13.5 percent. The Refinance index climbed 18 percent a week after plummeting 20 percent. The Purchase Index jumped 12 percent a week after falling 3 percent.
The refinance share of mortgage activity edged up to 61 percent, a week after sinking to 57 percent, its lowest level since April 2010. Refinances had accounted for more than 80 percent of applications earlier this year