New Bottom for Mortgage Rates

New Bottom for Mortgage Rates

RECBL - Real Estate News

Mortgage rates overall hit a new bottom first week of September, with the 30-year, fixed rate averaging 3.78 percent, a decrease from 3.82 percent the week prior, according to Freddie Macs recently released Primary Mortgage Market Survey(R) (PMMS(R)).

The 15-year, fixed rate averaged 3.08 percent, down from 3.12 percent the week prior, while the 5-year, Treasury-indexed hybrid adjustable rate averaged 3.15 percent, up from 3.14 percent the week prior.

"The 10-year Treasury yield fell nine basis points this week, reaching a new 2017 low for a second consecutive week," says Sean Becketti, chief economist at Freddie Mac. "The 30-year mortgage rate followed, dropping four basis points to a year-to-date low of 3.78 percent."

The movement of mortgage rates is related, to an extent, to the movement of the key interest rate, which is set by the Federal Reserve and will be voted on at its quarterly meeting in September. Employment data for August suggest the key rate, and mortgage rates, as a result, will stay low.

"It has been a humdrum economy so far this year, seesawing between good to tolerable, yet certainly not great," said Lawrence Yun, chief economist of the National Association of REALTORS(R) (NAR), in a statement on the August jobs report. "Nonetheless, the 12-month job gains total still tops 2 million, and that will likely grow household formation and home-buying demand. The job figures...assures that interest rates will remain low for a longer period."

Source: Freddie Mac

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FAVORABLE LENDING STANDARDS, LOW RATES TO LIFT HOUSING THROUGH 2016

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A recently released forecast expects the economy to regain ground through the remainder of the year, boding well for the housing market in the months to come. According to Fannie Mae's Economic & Strategic Research Group's recent 2016 Economic and Housing Outlook, the economy is on track to grow 1.8 percent this year, boosted by an improving employment landscape and higher levels of consumer spending-both of which will give lift to housing.

"Housing market fundamentals remain a mixed bag," Doug Duncan, Fannie Mae's chief economist, explained in a statement about the Outlook. "During the second quarter of 2016, both new- and existing-home sales rose to expansion highs, while single-family starts pulled back, remaining historically low for an expansion.

"Tight housing inventory from a lack of new construction continues to create affordability challenges, particularly at the lower end of the market," Duncan continued. "Robust rental demand during the second quarter of the year has created the lowest rental vacancy rate in decades. In addition, the homeownership rate dropped to below 63 percent in the second quarter, but we are seeing some tentative signs of older millennials moving toward homeownership.

"We expect homebuyers will benefit from improving job and wage growth, more favorable lending standards, and continued low mortgage rates through the rest of the year, with the 30-year fixed-rate mortgage rate projected to average 3.4 percent during the fourth quarter."

Source: Fannie Mae

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