Average Mortgage Rates Lower as Investors Seek Safe Haven in U.S. Treasuries

After six weeks of mostly increases, average mortgage rates finally pulled back this week as investors sought safety in U.S. Treasuries in light of global economic uncertainties, according to Freddie Mac’s weekly update.
The average 30-year fixed mortgage rate decreased from 4.08 percent to 4.04 percent this week. The average longterm rate has been over 4 percent since the beginning of June. In January, the 30-year loan hit its low for the year at 3.66 percent.

Although four basis points in not a big move, it signals a potential pullback of mortgage rates as the housing market struggles somewhat with tight supplies, higher prices and fewer households able to cover required downpayments. Homeowner affordability has been strained, especially among first-time homebuyers.
“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China,” said Sean Becketti, chief economist, Freddie Mac. “Mortgage rates fell as well, although not by as much as government bond yields. The rate on 30-year fixed-rate mortgages fell 4 basis points to 4.04 percent.”
Becketti added that overseas volatility is likely to persist for some time, “providing some restraint on potential U.S. rate increases.”
Moreover, the minutes of the June meeting of the central bank’s Federal Open Market Committee suggest the Federal Reserve will proceed cautiously — as policymakers monitor events both overseas and in the U.S. They have to find the right time-frame to begin the much-anticipated raising of short-term interest rates.
“As a result, mortgage rates may remain in the neighborhood of 4 percent for a while,” he said.
Here is Freddie Mac’s overview of rates for the week:
30-year fixed-rate mortgage (FRM) averaged 4.04 percent, with an average 0.6 point for the week ending July 9, 2015, down from last week when it averaged 4.08 percent. A year ago at this time, the 30-year FRM averaged 4.15 percent.
15-year FRM this week averaged 3.20 percent ,with an average 0.5 point, down from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 3.24 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.93 percent this week, with an average 0.4 point, down from last week when it averaged 2.99 percent. A year ago, the 5-year ARM averaged 2.99 percent.
1-year Treasury-indexed ARM averaged 2.50 percent this week, with an average 0.3 point, down from last week when it averaged 2.52 percent. At this time last year, the 1-year ARM averaged 2.40 percent.

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