Rates for home loans fell, with no bottom in sight as investors increasingly brace for slowing economic growth.
The 30-year fixed-rate mortgage averaged 4.28% in the March 21 week, mortgage guarantor Freddie Mac said Thursday. That was down 3 basis points during the week and a 13-month low for the popular product, which has managed a weekly gain only twice during 2019.
The 15-year adjustable-rate mortgage averaged 3.71%, down from 3.76%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.84%, unchanged during the week.
Fixed-rate mortgages follow the benchmark U.S. 10-year Treasury note TMUBMUSD10Y, -0.15% , although they move with a bit of a lag. Investors have been piling into bonds over the past week, betting on a more dovish stance from the Federal Reserve.
That turned out to be the right call. After the release of the central bank’s statements, bond prices jumped, pushing yields down sharply. Freddie’s weekly mortgage survey captures activity through Tuesday, so the big bond market moves of this week will likely be reflected in mortgage rates next week.
This may be the sweet spot for borrowers. Lower rates are obviously a boon for the housing market, which has struggled in the face of a supply crunch, rising prices, and outsize demand. But the economy hasn’t slowed enough that people are losing their jobs. Americas are still showing signs that they want to try to become homeowners. Mortgage applications rose 1.6% over the past week as rates drifted down, the Mortgage Bankers Association said Wednesday.
But few of the other obstacles have been resolved. The average mortgage application size hit a fresh high for the third week in a row as the supply of entry-level homes dwindled, the MBA said. The upcoming spring selling season will be watched very closely for clues about how the market is doing.
Source: ANDREA RIQUIER