“Mortgage rates dropped over the course of last week as global tensions increased surrounding events in the Middle East and the Korean peninsula,” said Michael Fratantoni, chief economist at the Mortgage Bankers Association.
Whenever investors are faced with uncertainty in the market, they move toward safe assets such as government bonds. Mortgage rates tend to follow the same path as long-term bond yields. When yields are down, home loan rates are usually lower. Since Friday, the yield on the 10-year Treasury has been falling. It dipped to 2.3 percent Wednesday, the lowest it has been since mid-November.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that more than half of the experts it surveyed say rates will remain relatively stable in the coming week, moving less than two basis points — a basis point is 0.01 percentage point — up or down. About a third of them expect rates to fall. Jim Sahnger, mortgage planner at Schaffer Mortgage, is one who predicts rates will hold steady.
“Rates dropped on concerns about political uncertainty and a poor employment report,” Sahnger said. “Look for things to continue where we are over the next week.”
Meanwhile, mortgage applications were up slightly last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — increased 1.5 percent. The refinance index was unchanged, while the purchase index rose 3 percent.
The refinance share of mortgage activity accounted for 41.6 percent of all applications, its lowest level since September 2008.
“The spring housing market is off to a solid start, with conventional purchase applications reaching their highest level on a seasonally adjusted basis since October 2015,” Fratantoni said.