Global and domestic unrest put downward pressure on mortgage rates this week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to 3.89 percent with an average 0.4 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.90 percent a week ago and 3.43 percent a year ago. The 30-year fixed rate is at its lowest level since late June.
The 15-year fixed-rate average slid to 3.16 percent with an average 0.5 point. It was 3.18 percent a week ago and 2.74 percent a year ago. The five-year adjustable rate average moved slightly higher to 3.16 percent with an average 0.4 point. It was 3.14 percent a week ago and 2.76 percent a year ago.
Tensions over North Korea and the racist violence in Charlottesville had already stoked anxiety among investors. Then came President Trump’s decision to disband two corporate advisory councils in the wake of the mass resignation of business leaders. Although the president’s move came too late in the week to affect Freddie Mac’s survey, political drama tends to drive investors toward bonds and away from stocks, pushing rates lower.
How much lower rates will fall depends on what lies ahead. Besides concerns over domestic and international turmoil, investors are beginning to lose faith the administration will enact fiscal reforms.
Bankrate.com, which puts out a weekly mortgage rate trend index, found that half of the experts it surveyed say rates will remain relatively stable in the coming week. Brett Sinnott, vice president of capital markets at CMG Financial, is one who expects rates to hold steady.
“Even with the political gridlock and ever-widening division between government parties, mortgage rates have been able to avoid any major disruptions and remained relatively calm for almost all of the summer,” Sinnott said. “The Fed is still contemplating another rate increase in December and is still expected to release a plan in regards to balance sheet correction when they meet next month. Unfortunately, it is difficult to tell whether or not it would be positive or negative.”
Meanwhile, mortgage applications were flat last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — ticked up slightly 0.1 percent. The refinance index rose 2 percent, while the purchase index fell 2 percent.
The refinance share of mortgage activity accounted for 47.8 percent of all applications.
The latest downturn “in rates led to an increase in refinance activity, as borrowers took advantage of the opportunity,” said Michael Fratantoni, MBA’s chief economist. “Purchase application volume was little changed for the week, dropping 1.5 percent, but remains about 10 percent ahead of last year’s pace.”