Long-term bond yields fall unexpectedly, pushing mortgage rates to February lows.
According to the latest data released by Freddie Mac on Thursday, the 30-year fixed rate average has fallen to 2.9% this week. A week ago it was 2.98% and a year ago it was 3.03%. The 30-year fixed rate stayed below 3% for six of the last seven weeks.
Freddie Mac, the state-approved mortgage investor, aggregates the interest rates of about 80 lenders across the country to produce weekly national averages. It uses interest rates for high quality borrowers with strong credit ratings and high down payments. Due to the criteria, these interest rates are not available to every borrower.
The survey is based on home buying mortgages, which can result in higher refinancing rates. Added to this is the price adjustment for refinancing transactions that came into force in December. The adjustment that applies to all Fannie Mae and Freddie Mac refinances is 0.5% of the loan amount. That’s the equivalent of $ 1,500 on a $ 300,000 loan.
The 15-year average of fixed interest rates slipped to 2.2%. A week ago it was 2.26% and a year ago it was 2.51%. The five-year average of the variable interest rate fell to 2.52%. A week ago it was 2.54% and a year ago it was 3.02%.
“Mortgage rates have fallen this week, their lowest level since winter,” said Matthew Speakman, a Zillow economist. “Despite generally strong headline June-June job numbers, a booming stock market and general signs of further recovery in the economy, investors continue to revise their very bullish economic growth forecasts made earlier in the year, putting downward pressure on longer-term government bond yields and the mortgage rates that affect them. “
Although the June employment report showed improvements in the labor market, 10-year government bond yields fell this week to their lowest level since February, closing at 1.30% on Thursday. Wall Street analysts are baffled by the decline. Many predicted that amid the recovery in the economy, investors would drop bonds, causing yields to rise nearly 2% at this point. Instead, they fell.
The minutes of the June Federal Reserve meeting were released this week. They said Fed officials have started talking about tapering their bond-buying program, which has kept mortgage rates low, but not many seem eager to begin the process. Although the financial markets reacted cautiously to the news, the Fed is expected to cut back on its purchases, which will drive up mortgage rates.
Bankrate.com, which publishes a weekly trend index for mortgage rates, found that more than half of the experts surveyed expect rates to fall in the coming week.
Meanwhile, mortgage applications fell for the second straight week, falling to their lowest level since early 2020.