Turmoil in the stock market drove mortgage rates lower this week, sending the 30-year fixed-rate average down to its lowest level in three months.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average dropped to 3.84 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.93 percent a week ago and 4.1 percent a year ago. The 30-year fixed rate hasn’t been this low since the week of May 21. It has remained below 4 percent for five weeks.
The 15-year fixed-rate average sank to 3.06 percent with an average 0.6 point. It was 3.15 percent a week ago and 3.25 percent a year ago.
Hybrid adjustable rate mortgages were mostly flat. The five-year ARM average fell to 2.9 percent with an average 0.4 point. It was 2.94 percent a week ago and 2.97 percent a year ago.
The one-year ARM average was unchanged from last week, holding steady at 2.62 percent with an average 0.3 point.
“Events in China generated eye-catching volatility in equity markets worldwide over the past week,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“Interest rates also rocked up and down — although to a lesser extent than equities — as investors alternated between flights to quality and bargain hunting among beaten-down stocks. …
“Given the recent volatility, mortgage rates could change up or down significantly by the time this report is released. There are indications though that the unsettled state of global markets will make the Fed think twice before taking any action on short-term interest rates in September. If that’s the case, the 30-year mortgage rate may remain subdued in the short-to-medium term, providing support for continued strength in the housing sector. Just this week, new home sales were reported to be up 26 percent year over year.”
Meanwhile, mortgage applications were flat, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume – crept up 0.2 percent from the previous week. The refinance index slid 1 percent, while the purchase index increased 2 percent.
The refinance share of mortgage activity accounted for 55.3 percent of all applications.