Mortgage rates increased for only the ninth time this year — putting a damper on refinance activity in the process.
The 30-year fixed-rate mortgage averaged 3.58% during the week ending Aug. 29, up three basis points from the previous week, Freddie Mac reported Thursday. Nevertheless, mortgage rates remained near the lowest levels they’ve been at over the past three years.
The 15-year fixed-rate mortgage also increased three basis points to an average of 3.06%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.31%, representing a decline of one basis point.
The decline in mortgage rates throughout the summer up until this week has not provided much of a boost to the home-buying market, even though the lower rates have slightly helped to offset affordability concerns caused by high home prices nationwide. Pending home sales slid 2.5% in July after having increased in the previous two months. People’s concerns with the state of the economy are keeping them on the sidelines of the housing markets, economists said.
Mortgage rates track the 10-year Treasury note, the yield on which has fallen sharply over the past year. Treasury yields rose Thursday amid potential signs of de-escalation in the trade war between the U.S. and China. A trade deal between the two countries could go a long way toward improving consumer sentiment and provide a boost to this housing market.
“Low mortgage rates along with a strong labor market are fueling the consumer-driven economy by boosting their purchasing power, which will certainly support housing market activity in the coming months,” Freddie Mac said in the report Thursday.
Meanwhile, the decline in mortgage rates had provided a major lift to the refinance market as existing homeowners sought to lock in the lowest rates the country has seen since the 2016 presidential election. And while rates just barely increased over the past week, that was enough to slow down refinance activity, a sign of how rate-sensitive the real-estate market is today.
The Mortgage Bankers Association reported Wednesday that mortgage application volume fell 6.2% this week from the previous week, driven by a decrease in refinancing applications.
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