The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since October 2015, 4.02 percent, from 4.06 percent, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
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The Federal Reserve sounded a note of concern Wednesday about how global pressures could affect a slowing USA economy. The US has been experiencing volatility in theglobal stock market, and this has pushed up bonds price as investors are seeking safety.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent this week with an average 0.5 point, down from last week when it averaged 2.91 percent.
The statement is a shift from the end of past year when the bank indicated it would prefer to keep the rate on hold. The government-backed mortgage-backer aggregates rates from 125 lenders from across the country to come up with a national average for the most popular mortgage products. On Thursday morning, the yield was stable at 2%.
The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. Application for mortgages increased 8.8% in the week, which ended Jan 22 from the previous week. There is also a speculation that homes sales may plateau this year after a solid increase in 2015.
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Mortgage applications rose as interest rates fell, according to a new report by the Mortgage Bankers Association (MBA), which noted a 6.2% increase in total mortgage applications from the prior week. One point equals 1% of the loan. This average does not include extra fees, which are known as points. Borrowers may still pay closing costs which are not included in the survey. There is no clear consensus this week, with 46 percent of the respondents predicting that mortgage rates will remain more or less unchanged in the next seven days, while 36 percent forecast further declines.
