Average mortgage rates drop, but more increases coming: Freddie Mac
Mortgage rates dropped slightly for the first time after five weeks of increases, but this is only a temporary lull as the economy remains strong, Freddie Mac said.
|30-Year FRM||15-Year FRM||5/1-Year ARM|
|Fees & Points||0.4||0.4||0.3|
The 30-year fixed-rate mortgage averaged 4.71% for the week ending Oct. 4, down from last week when it averaged 4.72%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.85%.
"Mortgage rates inched back a little in this week's survey, easing 1 basis point after hitting a seven-year high last week. There is upside risk to mortgage rates as the economy remains very robust and this is reflected in the very recent strength in the fixed income and equities markets," Sam Khater, Freddie Mac's chief economist, said in a press release.
"However, the strength in the economy has failed to translate to gains in the housing market as higher mortgage rates have contributed to the decrease in home purchase applications, which are down from a year ago. With mortgage rates expected to track higher, it's going to be a challenge for the housing market to regain momentum."
The 15-year fixed-rate mortgage this week averaged 4.15%, down from last week when it averaged 4.16%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.15%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.01% with an average 0.3 point, up from last week when it averaged 3.97%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.18%.
"Mortgage rates trended slightly lower this week, despite a late rally on encouraging jobs data. After rates soared to five-year highs in September, borrowers were offered a slight reprieve this week as inflation and manufacturing data releases failed to move the market and analysts continued to absorb the revamped North American trade pact," Aaron Terrazas, senior economist at Zillow, said when that company released its own rate tracker on Oct. 3.
"Overseas, uncertainty surrounding the Italian government's commitment to the euro boosted demand for safer assets and caused rates to dip slightly. However, yesterday’s private payrolls report exceeded expectations and reinforced the strength of the booming U.S. economy, allowing rates to rebound. If Friday's employment report is in line with the jobs release, a return to rapid rate increases could be in store."