A shaky global economy is scaring investors into bonds, sending long-term mortgage interest rates to their lowest levels in three months, according to data from mortgage backer Freddie Mac.
The average rate on the 30-year fixed rate mortgage (FRM) fell for the fourth straight week, slipping to 3.79 percent, excluding fees in the week ended January 28, 2015, down from 3.81 percent the previous week but still up from 3.66 percent the year before. It is now the lowest it has been since the week of October 29, 2015 when it averaged 3.76 percent.
The 15-year FRM carried an average rate of 3.07 percent, also a three-month low, down from 3.10 percent a week earlier, but up from 2.98 percent last year at this time. The 5-year adjustable rate mortgage (ARM), fell to an average of 2.90 percent, down from 2.91 percent a week ago, but up from 2.86 percent the previous year.
Freddie Mac chief economist Sean Becketti noted that the dip in rates coincides with the Federal Reserve’s decision this week to hold rates steady in the uncertain economic climate. “The yield on the 10-year Treasury stabilized around 2 percent this week, and the 30-year mortgage rate dipped 2 basis points to 3.79 percent, Becketti said. “The recent market turmoil has given the Fed pause; as was universally expected, the Fed stood pat this week but kept its options open for a rate increase in March. This week’s housing releases confirmed the momentum of home sales going into 2016. A hesitant Fed, sub-4-percent mortgage rates (at least for a little while longer), and strong housing fundamentals should generate a three percent increase in home sales this year.”
Rates are likely to stay low until global financial concerns are balanced out by a much more robust domestic economy.