Mortgage rates remained stable as the 30-year fixed-rate loan settled in near 3.8% for the third straight week, according to Freddie Mac. However, late week bond yield movements point toward more declines ahead, Zillow noted separately.
“While the continued drop in mortgage rates has paused, homebuyer demand has not,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “This is evident in increased purchase activity and loan amounts, indicating that homebuyers still have the willingness and capacity to purchase homes. Today’s low rates, strong job market, solid wage growth and consumer confidence are typically important drivers of home sales.”
But there might be some volatility in the weeks ahead, as rates began trending down towards the end of the period, following announcements from the central banks in Europe and the U.S., Matthew Speakman, an economic analyst at Zillow, said when that company released its rate tracker.
“On Tuesday, European Central Bank President Mario Draghi suggested that more stimulus was likely in the coming months, in comments that sent bond yields sharply downward. Fed Chairman Jerome Powell followed suit on Wednesday, holding the federal funds rate steady but suggesting that the Fed would be open to cutting rates in the coming months should the current economic outlook fail to improve,” Speakman said.
Because of those statements, bond yields fell to their lowest levels since Election Day 2016. “Mortgage rates are likely to follow in tow for the short term, although it’s unclear how long these low rates will last.
“While returns to autumn highs are unlikely in the short term, some sectors of the economy remain very strong. Should more encouraging signals arise — particularly improvements in inflation or positive developments in the U.S.-China trade discussions — the case for a Fed rate cut would weaken and mortgage rates would likely be back on the rise,” Speakman said.
The 30-year fixed-rate mortgage averaged 3.84% for the week ending June 20, up from last week when it averaged 3.82%, Freddie Mac reported. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.57%.
The 15-year fixed-rate mortgage averaged 3.25%, down from last week when it averaged 3.26%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.04%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.48% with an average 0.4 point, down from last week when it averaged 3.51%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.83%.