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Mortgage rates have fallen in the last week, a boon for those looking to buy a home or refinance.
The 30-year fixed rate mortgage averaged 3.55% for the week ending Aug. 22, five basis points lower than the week before, Freddie Mac.
HSFC + 6.30%
reported Thursday.
30-year home loan rates have risen only eight times a week so far this year – if not, they have gone down or have remained unchanged.
According to Freddie Mac, the 15-year fixed rate mortgage has dropped four basis points to reach an average of 3.03%. The variable rate 5/1 mortgage averaged 3.32%, a decrease of three basis points.
Mortgage rates follow 10-year Treasury bills
TMUBMUSD10Y, + 0.37%.
Last week, yields on the 10-year note and the 2-year Treasury note
TMUBMUSD02Y, + 1.03%
for the first time in more than a decade, which means that the yield on the short-term note was higher. The reversals of the yield curve have historically shown that the US economy could face a recession.
In the future, it is unclear whether mortgage rates will fall further or rise. Federal Reserve officials appear to view the rate cut last month as a "recalibration" and not necessarily as the first of several cuts, according to the minutes of their last meeting on Wednesday.
When the Federal Reserve lowers its rates, it directly affects short-term interest rates rather than long-term rates like the 30-year mortgage. Nevertheless, the mortgage market tends to take into account the expectations of future Fed moves on the rates offered, which is why mortgage rates were falling well before the Fed acted.
The decline in mortgage rates this year triggered the largest refinancing boom in three years.
The most recent data on existing home sales released on Wednesday indicate that lower rates in July prompted an acceleration in home buying activity, particularly in the West. The rate cut has also caused the biggest refinancing boom in years.
"The advantage of lower mortgage rates is not only to boost home sales, but also to support homeowner balance sheets with higher monthly cash flows and a steady increase in home equity." "said Freddie Mac in his report Thursday.
But the same obstacles that prevented many people from buying a house remain. There are very few properties for sale and house prices rise accordingly. This has made the purchase of a home much more expensive and the low mortgage rates only marginally offset the affordability constraints.
While the economy is likely to sink into recession, mortgage rates could fall further in the weeks and months to come. But a weaker economy could hurt consumer confidence – which would be even less likely to get people to buy a home.
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