Having fallen below 3% for the first time since Freddie Mac started recording, the mortgage rates have risen above 3% once again, thus arresting a fall which began 6 weeks ago. At this point, it is only symbolic though. From 2.98% on July 16, we are at 3.01% (July 23). On the year-to-year chart, the 30-year fixed-rate mortgage traded at 3.75%.
To quote Freddie Mac’s chief economist, Sam Khater, “While housing demand continues to rebound, the month-long swoon in economic activity has caused the 10-year Treasury benchmark to drop,” He added, “In the short term, this means the demand will continue on the back of near record low mortgage rates.”
In the week between July 16 and July 23, the 10-year treasury yield dropped to 0.597% from 0.619%, expanding the spread by 5 basis points. That is a +3% drop. Of course, it can be put down to the uncertain economic environment.
To paraphrase Khater, a halt in economic activity may add to the labor-market dismay by raising unemployment levels. This, he believes, is already being pointed by the data on consumer spending.
As about the 15-year fixed-rate mortgage, its 2.54% for the week ending July 23 is a rise from 2.48% registered a week prior. On the year-to-year chart, the number posted was 3.18%, representing a 20% drop from then.
The five-year adjustable-rate mortgage, which averaged 3.47% a year ago, has fallen to 3.09% in a year’s time (11% drop). Over the week, it has risen by .03%.
Matthew Speakman, the economist for Zillow is with Khater on the subject of record-low rates. He said in a press release, “Positive news on the latter will most likely jolt rates from this recent slumber and send them back upward. However, absent any significant developments, these low rates will remain. Whether rates remain steady or finally begin a long climb back will depend almost entirely on the battle against COVID-19.”