After falling more than a half percentage point the past four months, mortgage rates rebounded this week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average moved slightly higher to 3.75% with an average 0.6 point. (Points are fees paid to a lender equal to 1% of the loan amount and are in addition to the interest rate.) It was 3.73% a week ago and 4.52% a year ago.
The 15-year fixed-rate average also ticked up to 3.18% with an average 0.5 point. It was 3.16% a week ago and 3.99% a year ago. The five-year adjustable rate average rose to 3.45% with an average 0.4 point. It was 3.39% a week ago and 3.74% a year ago.
News out of Japan last week prompted mortgage rates to reverse course. Financial markets were buoyed by the United States and China agreeing to restart trade negotiations following the Group of 20 summit meeting.
Then on Monday, the U.S. government threatened tariffs on European goods. That boosted fears of a global economic slowdown, sending 10-year Treasury yields to their lowest levels since November 2016. The yield fell to 1.98%.
Lower bond yields tend to lead to lower mortgage rates, but the move came too late in the week to factor into Freddie Mac’s survey. The federally chartered mortgage investor aggregates current rates weekly from 125 lenders from across the country to produce national averages of popular mortgage rates.
“We’re seeing a tug of war happen as the fixed income market flashes warning signs while the equities market continues to march higher with optimism,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“The data suggests the economy is weakening but is still on very solid ground with high consumer confidence and strong labor market. Closer to home, the housing market continues to slowly improve and gain momentum as we head into the second half of the year, which is good news and should keep the economy growing.”
Meanwhile, mortgage applications were flat heading into the holiday week. According to the latest data from the Mortgage Bankers Association, the market composite index - a measure of total loan application volume - decreased 0.1% from a week earlier. The refinance index slipped 1% from the previous week, while the purchase index ticked up 1%.
The refinance share of mortgage activity accounted for 51% of all applications.
“Purchase applications picked up slightly last week, as conventional and government activity were each up around 1%,” Joel Kan, an MBA economist, said in a statement. “Furthermore, in continuation of the gradual growth trend seen throughout the first half of 2019, purchase activity was almost 10% higher than a year ago. . . .
Conventional refinances dropped slightly over the week, but there was a pick-up in government refinances, with FHA activity jumping 17%. Additionally, the average loan amount for government refinance applications reached another survey high at $282,500.”