The 15-year fixed-rate average declined to 3.23 percent with an average 0.5 point. It was 3.29 percent a week ago and 2.75 percent a year ago. The five-year adjustable rate average dropped to 3.21 percent with an average 0.5 point. It was 3.28 percent a week ago and 2.78 percent a year ago.
Lawrence Yun, chief economist at the National Association of Realtors, said in a phone interview that the rate decline should be welcome news to house hunters — the monthly payment set for consumers obtaining a mortgage last week would be about $15 less than a week earlier. But they shouldn’t expect the rate declines to last.
“There has been slight movement up and down in the mortgage rates but overall it’s not any meaningful change — this shouldn’t change people’s decision about buying a home or not,” Yun said. “So people who are seriously in the market will be unmoved by the small changes. People who are not in the market — this is not enough to entice them back into the market. [Consumers] should understand there will be some small movement over the next 12 or 24 months, but mortgage rates will be higher just because the Federal Reserve will be raising [interest] rates.”
Freddie Mac’s Chief Economist Sean Becketti attributed the rate decline to weak Treasury yields, which drive mortgage rates.
“Continued economic uncertainty and weak inflation data pushed rates lower this week,” Becketti said in a statement. “The 10-year Treasury yield fell 5 basis points this week. The 30-year mortgage rate moved with Treasury yields, dropping seven basis points to 3.96 percent.” (Basis points are one hundredth of 1 percent.)
Meanwhile, mortgage applications increased last week, according to the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — rose 6.3 percent. The refinance index jumped 13 percent, while the purchase index increased 1 percent.
The refinance share of mortgage activity accounted for 44.7 percent of all applications.