The 15-year fixed-rate average dropped to 3.04 percent with an average 0.8 points. It was 3.09 percent a week ago and 3.88 percent a year ago. The five-year adjustable-rate average sank to 3.28 percent with an average 0.3 points. It was 3.39 percent a week ago and 3.9 percent a year ago.
“Perhaps surprisingly, major geopolitical developments over the past month — stories that dictated most of mortgage rates’ movements through 2019 — have failed to let rates loose in any meaningful way,” said Matthew Speakman, a Zillow economist. “Inflation is running below target and the Federal Reserve appears unlikely to raise the federal funds rate in the near future, so upward pressure on mortgage rates is limited for the time being. With a shortage of market-moving data on tap, and barring a monumental development on the trade front, this minimal upward pressure on rates is unlikely to strengthen in the coming days.”
The optimism that has fueled the stock market to record highs lately hasn’t damped investors’ enthusiasm for bonds. The yield on the 10-year Treasury dipped to 1.77 percent on Wednesday. Typically bond prices fall and yields rise when the Dow Jones industrial average soars. The pressures that are keeping bond yields low are also holding down mortgage rates.
“Even though the stock market is at all-time highs, the bond market doesn’t believe in the higher rate of the growth story,” said Logan Mohtashami, senior loan officer at AMC Lending Group in Irvine, Calif. “We also have cautionary headlines such as Boeing delays and now the coronavirus, to which some people believe this might hinder some growth. … The market believes the Fed is really out of the picture while growth is stalling. The bond market will get ahead of any Fed action in the future so, for now, Fed meetings don’t have the same importance as they did last year.”
The refinance share of mortgage activity accounted for 61.6 percent of applications.
“Although mortgage applications pulled back slightly last week, the year-over-year comparison points to a solid start for the mortgage market in early 2020,” said Bob Broeksmit, MBA president and CEO. “Refinances were up an impressive 116 percent from a year ago, while purchase activity increased 8 percent. With rates forecasted to stay below 4 percent in the near future, applications should remain at this elevated level.”
source: WASHINGTON POST
