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Mortgage rates dropped slightly for the second time in the past three weeks as yields on the benchmark 10-year Treasury note remained flat for most of the period, according to Freddie Mac.
|30-Year FRM||15-Year FRM||5/1-Year ARM|
|Fees & Points||0.5||0.5||0.3|
However, those yields increased 5 basis points between midday on Oct. 30 and the morning of Nov. 1, and mortgage rates are likely to follow.
“Mortgage rates are roughly in line with where they stood a week ago — buffered by the push and pull forces of a sinking stock market against the upward tug of a string of strong economic data releases,” Aaron Terrazas, senior economist at Zillow, said when that company released its own rate tracker on Oct. 31. “The Treasury Department’s plans to fund growing fiscal deficits shifted momentum toward the upside earlier today.”
The 30-year fixed rate conforming mortgage is 89 basis points higher than for the same week one year ago, Freddie Mac said.
“While higher mortgage rates have led to a decline in home sales this year, the weakness has been concentrated in expensive segments versus entry-level and first-time buyer which remains firm throughout most of the rest of the country,” Sam Khater, Freddie Mac’s chief economist, said in a press release.
“Despite higher mortgage rates, the monthly mortgage payment remains affordable. For many buyers the chronic lack of entry-level supply is a larger hurdle than higher mortgage rates because choices are limited and the inventory shortage has caused home prices to rise well above fundamentals.”
The 30-year fixed-rate mortgage averaged 4.83% for the week ending Nov. 1, down from last week when it averaged 4.86%, according to Freddie Mac. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.94%.
The 15-year fixed-rate mortgage this week averaged 4.23%, down from last week when it averaged 4.29%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.27%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.04% with an average 0.3 point, down from last week when it averaged 4.14%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.23%.
Future mortgage interest rate increases are possible based on the Nov. 2 jobs report.
“All eyes are on the ever-important monthly jobs report due Friday and what it could mean for Fed moves over the next year,” Terrazas said. “With the labor market at full employment, there is no sign yet that financial market turmoil has spilled over into the real economy. Strong wage numbers on Friday could bolster the case that the American economy can withstand higher interest rates despite the volatility on Wall Street and some potentially disconcerting signals from soft housing data.”