A Freddie Mac sign stands outside the company's headquarters in McLean, Virginia, U.S., on Tuesday, April 8, 2014. Senator Sherrod Brown, an Ohio Democrat and a member of the Senate Banking Committee, said a bipartisan bill to replace Fannie Mae and Freddie Mac is too complicated and doesn't do enough to address too-big-to-fail concerns or provide assistance for affordable housing. The panel will consider the measure on April 29. Photographer: Andrew Harrer/Bloomberg (Andrew Harrer/Bloomberg News)

Fixed mortgage rates retreated this week but strong economic data and comments by the incoming and outgoing Federal Reserve chairs left many anticipating higher rates.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to 3.90 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.92 percent a week ago and 4.08 percent a year ago.

The 15-year fixed-rate average slid to 3.30 percent with an average 0.5 point. It was 3.32 percent a week ago and 3.34 percent a year ago. The five-year adjustable-rate average jumped to 3.32 percent with an average 0.3 point. It was 3.22 percent a week ago and 3.15 percent a year ago.

Financial markets appeared to like what they heard from President Trump’s nominee to become the Fed chair. They reacted positively following Jerome Powell’s confirmation hearing before the Senate Banking Committee. As investors sent the stock market to new highs, bond prices fell. The yield on the 10-year Treasury rose to a two-week high of 2.37 percent Wednesday. Home loan rates are strongly influenced by the bond market.

Also Wednesday, Janet L. Yellen indicated in what probably was her final remarks on Capitol Hill as Fed chair that a strengthening economy will support more interest rate increases. It is widely expected that the central bank will raise its benchmark rate at its next meeting, Dec. 12-13.

But Zillow senior economist Aaron Terrazas doesn’t think home loan rates will move much between now and then.

“Despite several major economic events – including confirmation hearings for the next chair of the Federal Reserve and major developments on tax reform – rates are unlikely to move dramatically as markets await the Fed’s next interest rate move in mid-December,” Terrazas said.

Others predict they will start rising sooner. Bankrate.com, which puts out a weekly mortgage rate trend index, found that a majority of experts it surveyed say rates will move higher in the coming week. Elizabeth Rose, branch manager of Movement Mortgage in Dallas, is one who expects rates to increase.

“Good news for the economy translates to bad news for mortgage rates,” Rose said. “And we’ve had some good economic data recently. The mortgage bond market is in a position to lose the recent improvements and move lower, which translates to higher mortgage rates.”

Meanwhile, mortgage applications fell 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 3.1 percent. The refinance index dropped 8 percent, while the purchase index rose 2 percent.

The refinance share of mortgage activity accounted for 48.7 percent of all applications.

“Applications to refinance showed a 7.7 percent decrease to the lowest level since January 2017, as there was no significant rate incentive for borrowers,” said Joel Kan, an economist with the Mortgage Bankers Association. “Both conventional and VA refinance applications drove the decline, decreasing 8.3 and 8.2 percent over the week, respectively. With an adjustment for the Thanksgiving holiday, purchase activity increased 1.8 percent to the highest since September 2017, and was 6.2 percent higher than the same week a year ago.”

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