“Weak economic data and growing international tensions are driving investors out of riskier sectors and into Treasury securities,” Sean Becketti, Freddie Mac chief economist, said in a statement. “This shift in investment sentiment has propelled rates lower.”
Because of uncertainty surrounding the French elections and tensions in North Korea, investors are scooping up bonds. That’s driving yields lower. The yield on a 10-year Treasury sank to its lowest point since November on Tuesday, dropping to 2.18 percent. Because home loan rates tend to follow the same path as long-term bond yields, they also fell.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that the experts it surveyed were almost evenly divided on where rates are headed in the coming week. Thirty-eight percent said they would fall, 38 percent said they would hold steady and 24 percent said they would rise. Michael Becker, branch manager at Sierra Pacific Mortgage, is one who predicts rates will remain relatively unchanged.
“To the surprise of many, the dip in mortgage rates continued this week,” Becker said. “Mortgage rates are now at the lowest levels for 2017. The question is will this rally continue, or will rates quickly revert to the higher levels of just a few weeks ago. … Looking forward, it’s hard to see rates dropping further in the coming week. But if first quarter GDP disappoints next Friday, this drop in rates could have further to go.”
Meanwhile, despite the drop in rates, mortgage applications were down last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume – decreased 1.8 percent. The refinance index was essentially unchanged, slipping 0.2 percent. The purchase index fell 3 percent.
The refinance share of mortgage activity accounted for 42.4 percent of all applications.