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Mortgage Rates Trend Further Downward Over The Past Week

Rates on the most popular types of mortgages trended lower still, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by three basis points (0.03 percent) to 3.60 percent. Conforming 5/1 Hybrid ARM rates decreased by four basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.84 percent.

“The vote for Britain to remain in or leave the European Union is coming up on Thursday and could rattle markets, so investors are wary at the moment,” said Keith Gumbinger, vice president of HSH.com. “The outcome is still unknown, and the repercussions on financial markets of Britain leaving the common market remain a mystery.”

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In recent days, opinion polls of British voters have swung back and forth between the decision to leave or remain in the European Union. The London Telegraph’s average of the last six polls has a 50-50 split, so things could go either way. Although mortgage rates are still lower this week than last, improving odds of a successful “remain” vote has lifted interest rates off bottoms, and we may see some of this reflected in mortgage rates over the next few days.

“Mortgage rates will remain low, regardless of the outcome of the “Brexit” vote,” adds Gumbinger. “The U.S. economic fundamentals haven’t changed, and a slow-growth, low-inflation pattern with no signs of action by the Fed should help keep them there well into the summer, if not beyond.”

Rates Are Continuing To Fall

Rates on the most popular types of mortgages  continued to decline, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by six basis points (0.06 percent) to 3.69 percent. Conforming 5/1 Hybrid ARM rates decreased by just two basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.94 percent.

“The appreciable decline in mortgage rates continued again this week, but we may be nearing the end of it, at least for the moment,” said Keith Gumbinger, vice president of HSH.com. “Gloomy global markets have brightened a little in the past few days, and influential yields have rebounded a bit after weeks of regular declines.”

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Ten-year U.S. Treasuries have a strong influence on fixed-rate mortgages, and in recent days yield on these have fallen regularly as investors moved their money out of the way of plummeting equity prices. In turn, this has pulled down mortgage rates.

Last week, Federal Reserve Chair Janet Yellen spoke before Congress and left open the possibility that the Fed may still raise short-term rates this year, something which is at odds with recent global economic trends. However, after an initial poor reaction to this idea, investors apparently considered  it in greater context, including a recent bit of more positive economic data with January retail sales and consumer sentiment measures in their assessment. This caused a perceptible change in the direction of yields and mortgage rates, which on a daily basis have nudged higher on Friday and Tuesday from a Thursday low point of HSH.com’s survey week.

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“Mortgage rates have stopped falling for the moment, and should the nascent trend hold, may even rise a little bit this week,” added Gumbinger. “Regardless, the considerable fall in rates since the turn of 2016 has produced an unexpected opportunity for homeowners and homebuyers. That said, markets are fickle and rarely continue in one direction for very long, so a bounce higher for rates isn’t unexpected. Borrowers should always consider locking in rates that make their purchase or refinance deal work without delay.”

Rates Fall To April 2015 Level

HSH.com releases its latest Weekly Mortgage Rates Radar showing that the 2016 downturn for mortgage rates continues unabated, as financial market turbulence and slow economic growth continue to drive rates downward. The Weekly Mortgage Rates Radar reports the average rates and points offered by lenders for the two most popular types of mortgages, the conforming 30-year fixed-rate mortgage and the conforming 5/1 adjustable-rate mortgage (ARM).

As they have for weeks, rates on the most popular types of mortgages eased again, according to HSH.com‘s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by another six basis points (0.06 percent) to 3.75 percent. Conforming 5/1 Hybrid ARM rates also decreased by six basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.96 percent.

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“With nothing to break the recent trend, mortgage rates continue downward,” said Keith Gumbinger, vice president of HSH.com. “Sluggish economic growth, little inflation, and strong global headwinds are all weighing on interest rates. Furthermore, investors increasingly believe that the Fed won’t raise rates anytime soon, so they continue to unwind bets that prepared for higher interest rates as the year progressed.”

The Federal Reserve’s own guidance back in December indicated that the central bank expected to lift the short-term rates it controls four or perhaps even five times in 2016. In the period since that meeting, the available data suggest that the economic climate has changed perceptibly. This calls into question whether or not higher rates are needed at the moment to help balance the growth and inflation trend.

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“Solid job growth, a decline in the unemployment rate and an uptick in wages would normally suggest that the Fed remains on track for raising rates multiple times this year.” adds Gumbinger. “While they still ultimately may do so, the current climate more likely suggests at the very least that the Fed will be patient in their approach, and likely will change policy fewer times. Overall, it means the mortgage rates will be lower for a longer period than expected, which is good news for the housing market.”

Rates Slip This Week

Rates on the most popular types of mortgages edged downward again this week, according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by four basis points (0.04 percent) to 3.96 percent. Conforming 5/1 Hybrid ARM rates decreased by five basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.98 percent.

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“The economic news has been somewhat disappointing of late, perhaps confirming the Fed’s decision to hold off increasing rates for a while,” said Keith Gumbinger, vice president of HSH.com. “However, the message from the Fed continues to suggest that a lift in rates will be coming during the year at some point, a case made again in recent days by both Fed Chair Janet Yellen and several FOMC [Federal Open Market Committee] members.”

The Fed demurred on a chance to lift short-term interest rates at its September meeting, citing concerns about global growth and the impact on the U.S. economy. Recently, economic data increasingly signal that growth in China continues to be sub-par and U.S. manufacturing is struggling under the weight of a strong dollar and slow export growth.

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“Mortgage rates have returned to being ‘data driven’,” adds Gumbinger. “If the economic data come in on the softer side, mortgage rates will tend to slip a little, as they did in the past week. Should we start to see a stronger tenor, a touch of firming is to be expected. That said, mortgage rates are merely wandering about, and will likely remain directionless until a trend one way or the other develops, or until we get closer to the date of the next Fed meeting.”

Average mortgage rates and points for conforming residential mortgages for the week ending September 29, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  • Average Rate:   3.96 percent
  • Average Points: 0.15

Conforming 5/1-year adjustable-rate mortgage

  • Average Rate:   2.98 percent
  • Average Points: 0.10

Average mortgage rates and points for conforming residential mortgages for the previous week ending September 22 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

  • Average Rate:   4.00 percent
  • Average Points: 0.19

Conforming 5/1-year adjustable-rate mortgage

  • Average Rate:   3.03 percent
  • Average Points: 0.10

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