The Washington Post - 07.09.2019

THE WASHINGTON POST

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SATURDAY, SEPTEMBER 7, 2019

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Mortgage Rates

BY KATHY ORTON

After holding steady for a

month, mortgage rates plunged

to their lowest levels in nearly

three years this week.

According to the latest data

released Thursday by Freddie

Mac, the 30-year fixed-rate aver-

age tumbled to 3.49 percent with

an average 0.5 point. (Points are

fees paid to a lender equal to 1

percent of the loan amount and

are in addition to the interest

rate.) It was 3.58 percent a week

ago and 4.54 percent a year ago.

In less than a year, the 30-year

fixed rate has fallen more than

125 basis points. (A basis point is

0.01 percentage point.) It w as 4.75

percent in December.

The 15-year fixed-rate average

dropped to 3 percent with an

average 0.6 point. It was 3.06

percent a week ago and 3.99

percent a year ago. The five-year

adjustable-rate average dipped to

3.3 percent with an average 0.4

point. It was 3.31 percent a week

ago and 3.93 percent a year ago.

“Mortgage rates fell further

over the last seven days, reaching

fresh three-year lows after manu-

facturing data confirmed that

uncertainty around the globe is

directly affecting the U.S. econo-

my,” said Matthew Speakman, a

Zillow economist.

The U.S. manufacturing sector

contracted last month for the

first time in three years, accord-

ing to the IHS Markit industry

report. The Manufacturing Pur-

chasing Managers’ Index sank to

its lowest level since September

2009, and new export orders

retreated at their fastest pace in a

decade.

“The contraction was the latest

sign that the U.S.-China trade war

is doing real damage to the econ-

omy — indeed, most survey re-

spondents noted that slowing

global trade is forcing them to

limit their output,” Speakman

said.

The weak manufacturing data

along with concerns over Brexit

and a stalemate in U.S.-China

trade talks rattled the stock mar-

ket and dragged down the yield

on the 10-year Treasury, which

fell to 1.47 percent this week, its

lowest level since July 2016.

“Looking ahead, more turbu-

lence for mortgage rates is likely

to come, as the markets digest

major developments emerging

from Hong Kong and the U.K., as

well as the August jobs report,

which is slated for Friday,” Speak-

man said. “The labor market has

been a pillar of strength for the

economy for many months, so a

weak report would surely alarm

investors and further depress al-

ready-low mortgage rates.”

Bankrate.com, which puts out

a weekly mortgage rate trend

index, found that half of the

experts it surveyed expect rates

to move lower in the coming

week.

“It’s no longer just the inverted

yield curve sending economic

warning signals, but now a con-

traction in the manufacturing

sector,” said Greg McBride, chief

financial analyst at Bank-

rate.com. “The consumer re-

mains strong, but as worries

mount, this will keep the down-

ward pressure on bond yields and

mortgage rates.”

Meanwhile, a slowdown in re-

finances caused mortgage appli-

cations to dwindle. According to

the latest data from the Mortgage

Bankers Association, the market

composite index — a measure of

total loan application volume —

decreased 3.1 percent from a

week earlier. The refinance index

fell 7 percent from the previous

week, while the purchase index

rose 4 percent.

The refinance share of mort-

gage activity accounted for 60.4

percent of all applications.

“Mortgage applications de-

creased 3.1 percent last week, as a

modest gain in purchase activity

was offset by a pullback in refi-

nances,” said Bob Broeksmit,

MBA president and chief execu-

tive. “Despite a leveling off in

applications in recent weeks, refi-

nances were still up 152 percent

from last year, and purchase ap-

plications were 5 percent higher.

With rates at levels not seen in

nearly three years, we expect a 15

percent increase in mortgage

originations in 2019.”

[email protected]

30-year average sinks on weak manufacturing data

0

1

2

3

4

5

6

Source: Freddie Mac

Weekly averages for

popular mortgage types

3.00

THE WASHINGTON POST

6%

4

5

3

2

1

’17 ’18 ’19

3.49

30-YEAR FIXED

15-YEAR FIXED

5-YEAR ARM

3.30

Uncertainty around

world is affecting U.S.

economy, analyst says

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Christie’s International Real Estate

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