Mortgage rates decrease following weak services data report

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Weaker-than-expected economic data led to a decline in mortgage rates this week, although consumer attitudes remain strong, and should continue to drive increased home purchase demand, according to Freddie Mac.

30-Year FRM 15-Year FRM 5/1-Year ARM
Average Rates 3.57% 3.05% 3.35%
Fees & Points 0.6 0.5 0.3
Margin N/A N/A 2.75

"Despite the economic slowdown due to weakening manufacturing and corporate investment, the consumer side of the economy remains on solid ground," Sam Khater, Freddie Mac's chief economist, said in a press release. "The 50-year low in the unemployment rate combined with low mortgage rates has led to increased homebuyer demand this year. Much of this strength is coming from entry-level buyers — the first-time homebuyer share of the loans Freddie Mac purchased in 2019 is 46%, a two-decade high."

Last week's economic news was punctuated by the Oct. 3 release of the Institute for Supply Management's Non-Manufacturing Index, an indicator of service sector activity, which came in weaker than expected.

"The news showed that a slowing manufacturing sector has begun to negatively affect the larger services sector, evidence that the economy is facing stronger resistance than previously estimated," Matthew Speakman, a Zillow economist, said when that company released its own rate tracker. "In the days since, rates have oscillated in a range close to a three-year low."

The 30-year fixed-rate mortgage averaged 3.57% for the week ending Oct. 10, down from last week when it averaged 3.65%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.9%.

The 15-year fixed-rate mortgage averaged 3.05%, down from last week when it averaged 3.14%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.29%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.35% with an average 0.3 point, down from last week when it averaged 3.38%. A year ago at this time, the five-year adjustable-rate mortgage averaged 4.07%.

And more volatility in mortgage rates is possible following the data releases scheduled over the next seven days.

"Trade-related developments continue to shake markets, especially in weeks like this that are light on economic data. Amid increasing tension between the U.S. and China, trade discussions did see some progress this week, and rates nudged up slightly as a result. It's likely that larger swings for mortgage rates are on the horizon as key consumer-related data releases — consumer sentiment on Friday and retail sales next Wednesday — are on deck," Speakman said.

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Mortgage rates forecast Mortgage rates Purchase First time home buyers Economy Freddie Mac Zillow