After a two-month rest above 4 percent, long-term mortgage rates have dipped back into more familiar territory this week, according to mortgage backer Freddie Mac, being pulled down by overseas stock troubles.
The average rate on a 30-year fixed rate conventional mortgage declined to 3.98 percent, excluding fees during the week ended July 30, 2015, down from 4.04 percent the week before. The 30-year rate is also down from one year earlier when it averaged 4.12 percent.
“Monday’s 8 percent decline in Chinese stock prices triggered similar — though smaller — sell-offs in global equity markets,” said Freddie Mac chief economist Sean Becketti. “The associated flight to quality drove U.S. Treasury yields down nearly 5 basis points. … With no clear direction coming from the Fed this afternoon, we expect more of the same in coming weeks.”
Foreign economic distress was not the only contributing factor this week, Becketti said.
“Recent housing data exhibited the same good news/bad news pattern as overseas developments. Coming into this week, existing home sales for June and the latest FHFA house pricemeasures both suggested a stronger tone in the housing market,” he commented. “However this week brought nothing but bad — or at least weaker-than-expected — news. New homes sales and pending home salesboth weakened and the Case-Shiller house price indices , while positive, fell below the lower end of expectations. Finally, the inadvertent release of Fed staff projections increased uncertainty over the timing of future Fed rate moves.”
The 15-year fixed rate mortgage also carried a lower rate this week, falling to 3.17 percent, down from 3.21 percent the previous week and from 3.23 percent during the same week of 2014. Rates on one-year adjustable rate mortgage also slipped, decreasing to an average of 2.52 percent from 2.54 percent the week before. The rate is still higher than last year’s 2.38 percent.