Mortgage rates stabilize following jobs, Iran headlines

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Mortgage rates for the most part were stable this past week as the markets looked warily at economic and geopolitical events, according to Freddie Mac.

"Mortgage rates inched up by one basis point this week with the 30-year fixed-rate mortgage averaging 3.65%. By all accounts, mortgage rates remain low and, along with a strong job market, are fueling the consumer-driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months," Sam Khater, Freddie Mac's chief economist, said in a press release.

"While the outlook for the housing market is positive, worsening homeowner and rental affordability due to the lack of housing supply continue to be hurdles, and they are spreading to many interior markets that have traditionally been affordable."


However, Zillow economist Matthew Speakman said economic and world news (such as the downing of a Ukrainian airliner by Iran) did not have a large effect on investor behavior. As a result mortgage rates moved in a narrow range and ended the week slightly lower, according to that company's rate tracker.

"December's jobs and inflation data both fell short of industry expectations, pushing rates down after two days of modest upward movement," said Speakman in a statement.

"Elsewhere, Wednesday's signing of an initial trade deal between China and the U.S. — a major development in what has been the most impactful story in bond markets over the past several months — prompted only a small response from investors that are otherwise cautiously digesting the news. The fact that many tariffs will remain in place illustrates the distance that still remains between the two nations and that will need to be covered in order to come to an enduring agreement."

The 30-year fixed-rate mortgage averaged 3.65% for the week ending Jan. 16, up slightly from last week when it averaged 3.64%, according to Freddie Mac. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.45%.

The 15-year fixed-rate mortgage averaged 3.09%, up slightly from last week when it averaged 3.07%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.88%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39% with an average 0.3 point, up from last week when it averaged 3.3%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.87%.

For the near term, the driver of mortgage rate movements will come from economic news more than the geopolitical headlines, Speakman said.

"It's been a stable start to 2020, with rates barely budging for the first two weeks of the year and remaining near multiyear lows. That could change with the Thursday release of December's retail sales data. If the figures exceed expectations, a return to upward momentum could be in store," he said.

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