Mortgage Rates Retreat for the First Time in 3 Weeks

The 30-year fixed-rate average had risen to three-month highs before falling back to 3.69 percent.  (istockphoto/; dwuan d. june ;)
The 30-year fixed-rate average had risen to three-month highs before falling back to 3.69 percent.

After three weeks of increases, mortgage rates fell back this week — but it looks to be only a temporary decline.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slid to 3.69 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 3.78 percent a week ago and 4.94 percent a year ago.

The 15-year fixed-rate average dropped to 3.13 percent with an average 0.4 point. It was 3.19 percent a week ago and 4.33 percent a year ago. The five-year adjustable rate average slipped to 3.39 percent with an average 0.3 point. It was 3.43 percent a week ago and 4.14 percent a year ago.

More than anything else these days, mortgage rates have been driven by the U.S.-China trade talks. Rates swooned late last week when doubts arose over the countries’ tentative pact.

But news earlier this week that both sides were considering rolling back some of the tariffs is causing rates to rise again. That news, which came too late to be factored into the Freddie Mac survey, prompted yields on the 10-year Treasury, which had dropped to 1.69 percent on Oct. 31, to rebound to 1.86 percent on Tuesday. Mortgage rates tend to follow the same path as long-term bonds. When yields rise, rates tend to also go up.

“Absent any surprises in economic data, I expect that rates should be slightly improved over the next week as questions remain over trade,” said Jim Sahnger, a mortgage planner with C2 Financial. “Should a deal be struck, though, all bets are off.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed nearly divided on where rates are headed. About half say rates will move higher in the coming week. But others say they will remain about the same.

Greg McBride, chief financial analyst with Bankrate.com, is one who expects them to rise.

“The economic glass is suddenly half-full, giving a boost to bond yields and mortgage rates,” he said.

While Elizabeth Rose, a certified mortgage planning specialist with AmCap Home Loans, predicts they will hold steady.

“Mortgage bonds have been in a battle the last few days and the pressure continues as stocks rally,” she said. “Although it isn’t a done deal, the U.S.-China trade deal signals a potential boost for growth around the globe. This would be a head wind for mortgage bonds along with increased inflation expectations in the markets.”

Meanwhile, mortgage applications were flat again last week. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — decreased 0.1 percent from a week earlier. The refinance index ticked up 2 percent, while the purchase index fell 3 percent.

The refinance share of mortgage activity accounted for 59.5 percent of all applications.

“The average loan size for both refinance and purchase applications remains elevated, which indicates that homeowners with larger loan balances and home buyers in the upper end of the market are more active right now,” said Bob Broeksmit, MBA president and chief executive. “Purchase activity was still 7 percent higher than a year ago, but lenders say supply shortages are hampering some prospective buyers this fall.”

Posted on WashingtonPost.com on 11/07/19.