30-Year Mortgage Rates Hit Four-Month Low
The average contract rate on 30-year mortgage loans was 5.85% with 0.6 points as Mortgage Servicing News went to press in the second week of August, according to Freddie Mac.
That was the lowest average interest rate reported in four months, but the recent slippage in rates has only caused a modest uptick in refinancing to date, perhaps suggesting that the pool of refinancing candidates has suffered burnout.
The MBA reported that in the first week of August, refinancing accounted for 37.2% of loan applications, up only modestly from the previous week. Data for the second week were not yet available.
It also means that rates were about 50 basis points lower than they had been one year earlier, when the industry was in the midst of its biggest refinancing year in history.
The average rate on 15-year loans was 5.24%.
To be sure, rates remain well above their low point of recent years, but evidence of slowing economic growth may be dampening expectations for higher rates in the near term.
"Last Friday's unexpectedly weak employment report caused interest rates on long-term Treasury bonds and, by extension mortgage rates, to fall as investors worried about the health of the U.S. economy," said Amy Crews Cutts, Freddie Mac deputy chief economist, in the company's weekly survey release.
"The Fed's rate hike on Tuesday was expected and the Fed's cautiously optimistic outlook calmed the market. As a result, 30-year fixed mortgage rates should stay steady near or just below 6% for a while, giving prospective homebuyers another chance to get in with a low rate."
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