US 30-year mortgage rates fell this week to 3.79%. This is a fourth week these rates have been falling amidst global economic worries and turmoil in thestock market. Federal Home Loan Mortgage Corp (OTCBB:FMCC), Mortgage buyer said the average rate on the long-term Mortgage had slipped from 3.81% in the previous week to 3.79% this week. At this rate, it stays below symbolically significant 4% level.
Though this rate is on a downward trend, it has increased from previous year, which was at 3.66% though it is still way below its historical average of 6%.
On Wednesday, Federal Reserve sounded a note of concern about how global pressure can affect a slowing US economy. Fed policymaker kept a key interest rate unchanged after this meeting. The US has been experiencing volatility in theglobal stock market, and this has pushed up bonds price as investors are seeking safety. This has depressed the yield on the bond, which mortgage rates track.
As of Wednesday, yield on a 10-year Treasury bond stood at 2%,This was a significant rise after it had dropped to 1.98% a week earlier. This drop had been the lowest since October. On Thursday morning, the yield was stable at 2%.
A sustained decline in Mortgage rates has spurred prospecting mortgage homebuyers. Application for mortgages increased 8.8% in the week, which ended Jan 22 from the previous week. The number of people who are signingcontracts to purchase homes also inched up last month. This was due to unseasonably warm weather in the Northeast. This is according to data issued by National Association of Realtor. There is also a speculation that homes sales may plateau this year after a solid increase in 2015.
Freddie Mac usually surveys lenders across the country during the start of the week so that they can calculate average mortgage rates. This average does not include extra fees, which are known as points. Borrowers have to pay to get the lowest rate of these. One point equals 1% of the loan. The average fee for this mortgage was unchanged since last week. It maintained a 0.6 point.