Average mortgage rates fall to 13-week low following U.S. attack
Average mortgage rates dropped to their lowest level since October as the financial markets reacted to rising tensions caused by the U.S. government's killing of an Iranian general, Freddie Mac said.
|30-Year FRM||15-Year FRM||5/1 ARM|
|Fees & Points||0.7||0.7||0.3|
The average for the 30-year fixed rate mortgage fell 8 basis points to 3.64%, compared with 3.72% one week ago. A year ago, the average towered 81 basis points higher at 4.45%.
"Mortgage rates fell to the lowest level in thirteen weeks, as investors sought the quality and safety of the U.S. Treasury fixed income markets," Sam Khater, Freddie Mac's chief economist, said in a press release. "The drop in mortgage rates, combined with the strong labor market, should propel a continued rise in homebuyer demand."
Fixed mortgage rates are benchmarked to, but do not necessarily move in tandem with, the yields on the 10-year Treasury note.
"A lack of meaningful changes to key data series over the past week means that nearly all of the market's movements were dictated by geopolitical events," said Zillow economist Matthew Speakman when that company released its own rate tracker. "Bond yields and mortgage rates fell in the immediate aftermath of escalated tensions between the U.S. and Iran, but rebounded somewhat after fears of a larger conflict between the two nations appeared to dissipate slightly (at least for now)."
The average rate for the 15-year FRM fell by 9 BPs to 3.07% from 3.16% last week and by 82 bps from 3.89% one year ago, Freddie Mac said.
But the five-year Treasury-indexed adjustable rate mortgage had the largest drop. The average rate decreased to 3.3% from 3.46% one week ago. For the same week in 2019, it had an average rate of 3.83%.
During the height of the holiday season, rates trended lower with no sudden movements or notable volatility, Speakman said.
"But volatility may return in coming days, potentially as soon as Friday's release of December's all-important jobs figures," he continued. "Should December's numbers come close to November's — which greatly exceeded experts' expectations – and tensions in the Middle East fail to escalate further, a return to upward-trending rates may be on the horizon."