Mortgage rates were flat this week, seemingly pausing in anticipation of two upcoming events — Friday’s employment report and the Federal Reserve meeting later this month.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to a new low for the year, falling to 3.94 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.95 percent a week ago and 3.66 percent a year ago. The 30-year fixed rate has moved lower for three weeks in a row.
The 15-year fixed-rate average was unchanged at 3.19 percent with an average 0.5 point. It was 2.92 percent a year ago. The five-year adjustable rate average climbed to 3.11 percent with an average 0.5 point. It was 3.07 percent a week ago and 2.88 percent a year ago.
“In a short week following Memorial Day, the 10-year Treasury yield fell 4 basis points,” Sean Becketti, Freddie Mac chief economist, said in a statement. “The 30-year mortgage rate remained relatively flat, falling 1 basis point to 3.94 percent and once again hitting a new 2017 low.”
Mortgage rates may not stay low for long. A strong jobs report could send rates higher. The Federal Reserve also is widely expected to raise its benchmark rate following its June 14 meeting. The Chicago Mercantile Exchange’s FedWatch tool indicates that investors put the chance of a rate hike at near certainty. The prospect of higher rates should drive bond yields higher. Because home loan rates tend to follow the path of long-term bonds, mortgage rates would likely rise too.
Yet more than half the experts surveyed by Bankrate.com, which puts out a weekly mortgage rate trend index, say rates will fall in the coming week. Michael Becker, branch manager at Sierra Pacific Mortgage, is one who expects rates to continue to hold steady.
“Mortgage rates are near their lows for 2017,” Becker said. “This despite the fact that the Federal Reserve continues to talk about rate hikes. I believe this is because markets are starting to discount the ability of the Trump administration to pass its pro-growth agenda, and the fact that economic data is coming in softer than expected. … I expect rates to stay low longer than most expect. But given that they are near the lows of the year I don’t see them dropping further.”
Meanwhile, mortgage applications dropped off last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — decreased 3.4 percent. The refinance index fell 6 percent, while the purchase index slipped 1 percent.
The refinance share of mortgage activity accounted for 43.2 percent of all applications.