Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national average mortgage rates. It uses rates for high-quality borrowers who tend to have excellent credit scores and at least 20 percent for a down payment. These rates are not available to every borrower.
The 15-year fixed-rate average slipped to 2.42 percent with an average 0.8 point. It was 2.46 percent a week ago and 3 percent a year ago. The five-year adjustable rate average edged up to 2.93 percent with an average 0.2 point. It was 2.91 percent a week ago and 3.3 percent a year ago.
“For real estate markets, low mortgage rates remain a potent fuel, driving demand and keeping purchasing activity rolling,” said George Ratiu, a senior economist at Realtor.com. “However, fast-shrinking inventory and aggressive price gains are combining to outrun buyers’ ability to afford a home as we head into the cooler season. The recovery in employment is taking much longer than anticipated, keeping a lid on wage growth. While consumers who are still employed have been able to save more over the past few months, housing prices rising at 10.3 percent year-over-year are outstripping income gains, and dampening the boost offered by low-cost financing.”
The mortgage markets calmed down after the Federal Housing Finance Agency announced it was delaying implementation of the refinancing fee until Dec. 1. The FHFA was set to institute a 0.5 percent fee to refinances backed by Fannie Mae and Freddie Mac as of Sept. 1. But after a backlash by industry leaders, the agency postponed implementation by three months.
“All is right in the world of mortgage rates, at least for now,” said Jennifer Kouchis, senior vice president of real estate lending at VyStar Credit Union in Jacksonville, Fla. “Most lenders reacted in a positive way after news hit on the delay of Fannie and Freddie’s loan-level price adjustment announcement, helping the overall outlook. Rates are now tracking closer to the bond market and dare I say almost back to their lowest point.”
After rising to close out August, long-term bond yields dipped at the start of the new month. The yield on the 10-year Treasury fell Wednesday to 0.66 percent. Although mortgage rates often follow the same path as bond yields, they have done less so recently.
“The 10-year is trading at [0.66] percent, which is lower than last week but some disappointing private sector employment news gave the Treasurys a slight bump but not enough to move mortgage rates,” Mitch Ohlbaum, mortgage banker at Macoy Capital Partners in Los Angeles. “Banks will hold the line on rates to keep business at steady flow.”
The Labor Department’s employment report, which will be released Friday, may influence rates.
“Slower-than-expected recovery of jobs will pull rates lower,” said Greg McBride, chief financial analyst at Bankrate.com.
“Rates will hold steady,” said Jeff Lazerson, president of Mortgage Grader in Laguna Niguel, Calif. “Too many borrowers. Not enough lenders to handle all of the loan volume.”
Meanwhile, mortgages applications declined last week. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — decreased 2 percent from a week earlier. The purchase index was essentially flat, down 0.2 percent from the previous week but was 28 percent higher than a year ago. The refinance index fell 3 percent but was 40 percent higher than a year ago. The refinance share of mortgage activity accounted for 62.5 percent of applications.
“August was another strong month for the housing market, as many prospective buyers continue to take advantage of record-low mortgage rates and look for more indoor and outdoor space for their families,” said Bob Broeksmit, MBA president and CEO. “Purchase applications have surpassed year-ago levels for 15 consecutive weeks, and MBA is now forecasting purchase volume in 2020 to increase around 5 percent to $1.34 trillion — the highest since 2006. Refinances have cooled in recent weeks, but activity is still much higher than a year ago.”
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