Just how low can mortgage rates go? According to a new survey from Freddie Mac, the interest rate on a 30-year fixed-rate loan fell to 3.67% for the week ending June 7, an eight basis point decline from seven days earlier.
The GSE, in its weekly primary market survey, found that 15-year FRMs fell three basis points to 2.94%.
In contrast, the five-year Treasury-indexed hybrid rate remained stable at 2.84% while the average rate for a one-year Treasury adjustable-rate mortgage rose by four basis points to 2.79%.
Average points remain lowest for one-year ARMs at 0.4 of a point, while the other three types of loans averaged 0.7 of a point.
A year ago lenders, on average, were offering 30-year FRMs at 4.49%. The average 15-year FRM product was offered at 3.68%, the average five-year Treasury hybrid rate was 3.28% and the average one-year Treasury ARM rate was 2.79%.
A new KBW report suggests the recent drop in fixed rates would in coming weeks increase “organic” refinancing and, in conjunction with HARP 2.0, further boost refi application numbers recorded on the Mortgage Bankers Association’s survey.
But the long-term rate-indicative 10-year Treasury yield (1.65% at deadline) recently returned to relatively higher levels after falling to record lows.
Continued tight underwriting standards could cause “burnout,” suggesting that the rate-driven boost in application activity could be temporary and somewhat constrained.