Mortgage rates were mixed this week as markets continue to search for a clear sign of where the economy is heading.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to a new 2017 low of 3.88 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.9 percent a week ago and 3.48 percent a year ago.
The 30-year fixed rate, which has remained below 4 percent for the past six weeks, hasn’t fallen this far down since the week of the presidential election.
The 15-year fixed-rate average remained the same as last week at 3.17 percent with an average 0.5 point. It was 2.78 percent a year ago. The five-year adjustable rate average crept up to 3.17 percent with an average 0.5 point. It was 3.14 percent a week ago and 2.7 percent a year ago.
Financial markets were rattled earlier this week after a speech by European Central Bank president Mario Draghi. His comments, which were interpreted as a sign that the bank was preparing to reduce its monetary stimulus, produced a sell-off in the bond market. The yield on the 10-year U.S. Treasury jumped eight basis points — a basis point is 0.01 percentage point — to 2.21 percent Tuesday.
The quick uptick in long-term bond yields came too late in the week to be factored into Freddie Mac’s survey. The government-backed mortgage-backer aggregates current rates weekly from 125 lenders from across the country to produce national average mortgage rates.
“The majority of our survey was conducted prior to Tuesday’s sell-off in the bond market which drove Treasury yields higher,” Sean Becketti, Freddie Mac chief economist, said in a statement. “Mortgage rates may increase in next week’s survey if Treasury yields continue to rise.”
However, more than half of the experts surveyed by Bankrate.com, which puts out a weekly mortgage rate trend index, say they anticipate home loan rates to remain about the same in the coming week.
“While the potential is high for news and info to have a dramatic impact on rates, I expect things to finish out with little change in mortgage rates,” said Jim Sahnger, mortgage planner with Schaffer Mortgage. “Rates may climb a bit going into mid-week when the survey is taken but should settle back down when the dust settles.”
Meanwhile, mortgage applications slowed last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume – decreased 6.2 percent. The refinance index fell 9 percent, while the purchase index tumbled 4 percent.
The refinance share of mortgage activity accounted for 45.6 percent of all applications.
“Mortgage rates have been essentially unchanged for the last four weeks,” said Mike Fratantoni, MBA chief economist. “And with that stability and rates above 4 percent, there is little to attract those looking to refinance. The average loan for home purchase dropped to its lowest level since January, indicating that jumbo borrowers stepped back, but entry-level buyers continue to come into the market, as evidenced by the 8 percent growth in purchase apps relative to last year at this time.”