Mortgage rates have persisted below 3.5 percent for 11 weeks now. That’s the longest they’ve been that low since a 19-week span that bridged 2012 and 2013.
During that time, the 30-year fixed-rate average sank to its all-time low of 3.31 percent. Although many observers predicted earlier this year that home loan rates would be steadfastly above 4 percent by now, they have defied expectations.
The last time the 30-year fixed-rate average crept above 3.5 percent was late June. It hasn’t been above 4 percent since December. To put this into perspective, the 30-year fixed rate had never dropped below 4 percent until just five years ago.
The 30-year fixed rate, the most popular home loan product, has been bouncing around 3 to 4 percent for so long now it’s difficult to remember the last time it was above 5 percent (2011) or 6 percent (2008).
As the fall home-buying season begins in earnest, low rates could provide a boost to the housing market but inventory would need to improve. The dearth of homes for sale has put a damper on the market.
Bankrate.com, which puts out a weekly mortgage rates trend index, found that nearly a third of the experts it surveyed think rates will go down in the coming week. Almost two-thirds say rates will remain unchanged, moving no more than plus or minus two basis points (a basis point is 0.01 percentage point).
This week, mortgage rates remained stuck where they have been the past couple months, according to the latest data released Thursday by Freddie Mac.
The 30-year fixed-rate average edged down to 3.44 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.46 percent a week ago and 3.9 percent a year ago. The 30-year fixed rate has sank 53 basis points since the start of the year.
The 15-year fixed-rate average slid to 2.76 percent with an average 0.5 point. It was 2.77 percent a week ago and 3.1 percent a year ago.
The five-year adjustable rate average fell to 2.81 percent with an average 0.4 point. It was 2.83 percent a week ago and 2.91 percent a year ago.
“As mortgage rates continue to range between 3.41 and 3.48 percent, many are taking advantage of the historically low rates by refinancing,” Sean Becketti, Freddie Mac chief economist, said in a statement. “Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent.”
Meanwhile, mortgage applications were flat this week, according to the latest data from the Mortgage Bankers Association.
The market composite index – a measure of total loan application volume – ticked up 0.9 percent from the previous week. The refinance index and purchase index each increased 1 percent. The refinance share of mortgage activity accounted for 64 percent of all applications.
“Going into the Labor Day holiday, mortgage rates and application volume saw little movement,” said Mike Fratantoni, Mortgage Bankers Association chief economist. “Purchase volume continues to run strong at 7 percent above last year at this time, with growth at both the high and low ends of the market, despite a job growth slowdown in August. MBA’s Weekly Applications Survey showed that purchase applications from February through May of this year were running between 15 to 30 percent higher than the previous year, and our forecast shows a second quarter 2016 volume of $275 billion for purchase loan originations, a 49 percent increase over the first quarter, on a non-seasonally adjusted basis.”
The MBA also released its mortgage credit availability index (MCAI) this week that showed lending standards tightened in August. The MCAI decreased 0.4 percent to 164.7 last month.
“Credit availability decreased slightly over the month, driven by one mid-sized investor closing their correspondent operations,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. “Despite the loss of all of the programs associated with this investor, the Jumbo MCAI increased by 0.5 percent, indicating that credit conditions continue to ease among jumbo loan programs.”