The Washington Post - 02.11.2019

THE WASHINGTON POST

.

SATURDAY, NOVEMBER 2, 2019

EZ

6

Mortgage Rates

BY KATHY ORTON

Mortgage rates continued to

climb this week but could be head-

ed lower.

According to the latest data

released Thursday by Freddie

Mac, the 30-year fixed-rate aver-

age moved higher for the third

week in a row, rising to 3.78 per-

cent 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 3.75 percent a

week ago and 4.83 percent a year

ago.

The 15-year fixed-rate average

increased to 3.19 percent with an

average 0.6 point. It was 3.18 per-

cent a week ago and 4.23 percent a

year ago. The five-year adjustable

rate average ticked up to 3.43 per-

cent with an average 0.4 point. It

was 3.4 percent a week ago and

4.04 percent a year ago.

“Even with a substantial dose of

economic data and news over the

past seven days, geopolitical de-

velopments once again had the

greatest impact on rates,” said

Matthew Speakman, a Zillow

economist. “Easing concerns sur-

rounding Brexit and the U.S.-Chi-

na trade tensions, the two major

geopolitical stories of the past

year, pushed mortgage rates high-

er on Monday. But this upward

momentum will likely be cur-

tailed after the Federal Reserve

announced a third cut to the fed-

eral funds rate this year.”

On Wednesday, the Federal Re-

serve lowered its benchmark rate

by a quarter of a percentage point

to a range of 1.5 percent to

1.75 percent. The move, widely

expected by the financial markets,

came too late in the week to be

factored into Freddie Mac’s sur-

vey. The federally chartered mort-

gage investor aggregates rates

weekly from 125 lenders from

across the country to come up

with national average mortgage

rates.

The Fed doesn’t set mortgage

rates, but its decisions influence

them. In cutting the federal funds

rate, even though unemployment

is low and the economy continues

to grow, albeit slowly, the central

bank is trying to shield the econo-

my from the effects of ongoing

trade tensions, Brexit uncertainty

and global economic weakness.

Mortgage rates tend to respond

more to the movement of the 10-

year Treasury. After the yield on

the 10-year bond peaked at

1.85 percent for the month on

Monday, it retreated to 1.78 per-

cent on Wednesday after the Fed’s

announcement. The pullback

could signal lower mortgage rates

are coming, depending on upcom-

ing economic data releases.

“The decline in the Fed’s short-

term rates is not likely to result in

noticeable drops in mortgage

rates, as bond investors look for

the soon-to-be-released third

quarter estimate of gross domes-

tic product,” said George Ratiu,

senior economist at Realtor.com.

“Low mortgage rates are expected

to remain on an increasingly

cloudy horizon.”

Bankrate.com, which puts out a

weekly mortgage rate trend index,

found that half of the experts it

surveyed say rates will hold steady

in the coming week.

“Like a ping-pong match where

the ball does not travel very far yet

clears the same net over and over,

mortgage rates have bounced

above and below the same net or

technical line for the last two

weeks, yet bonds have ended up

right where they started,” said

Derek Egeberg, certified mort-

gage planning specialist at Acad-

emy Mortgage in Yuma, Ariz.

“Look for rates to remain on this

same table until more significant

economic news becomes avail-

able.”

Meanwhile, mortgage applica-

tions were flat last week. Accord-

ing to the latest data from the

Mortgage Bankers Association,

the market composite index — a

measure of total loan application

volume — increased 0.6 percent

from a week earlier. The refinance

index fell 1 percent, while the pur-

chase index ticked up 2 percent.

The refinance share of mort-

gage activity accounted for

58 percent of all applications.

“Mortgage applications rose

0.6 percent last week, as a 2 per-

cent gain in purchase activity off-

set a slight decline in refinances,”

said Bob Broeksmit, MBA presi-

dent and CEO. “With mortgage

rates much lower than they were

last fall, purchase applications

were up a strong 10 percent from a

year ago.”

[email protected]

30-year figure moves higher for the third week in a row

0

1

2

3

4

5

6

Source: Freddie Mac

Weekly averages for

popular mortgage types

3.19

THE WASHINGTON POST

6%

4

5

3

2

1

’18 ’19

3.78

30-YEAR FIXED

15-YEAR FIXED

5-YEAR ARM

3.43

Numbers not affected by

Fed’s interest rate cut

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