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Mortgage rates dropped this past week as investors pulled money from the stock market over global trade worries and instead purchased bonds, according to Freddie Mac.
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The 30-year fixed-rate mortgage averaged 4.75% for the week ending Dec. 6, down from last week when it averaged 4.81%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.94%.
“This week’s rate reaction to the volatile stock market is a welcome relief to prospective homebuyers who have recently experienced rising rates and rising home prices,” said Freddie Mac Chief Economist Sam Khater in a press release.
Mortgage rates are at their lowest levels in two months because of the uncertainty over global trade and the U.S.-China relationship in particular, added Aaron Terrazas, Zillow’s senior economist when that company released its own rate tracker on Oct. 5.
“Investors rapidly retreated to safe haven assets in a move reminiscent of previous global scares over the past three years that have repeatedly held long-term lending rates down even as short-term rates have increased,” Terrazas said. “These trends paused as the federal government and financial markets were closed Wednesday to honor President George H.W. Bush.”
Yields on the benchmark 10-year Treasury, which had been above 3% since mid-September, broke below that barrier on Dec. 3 and fell to 2.85% as of 11 a.m. on Dec. 6.
The 15-year fixed-rate mortgage this week averaged 4.21%, down from last week when it averaged 4.25%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.36%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.07% with an average 0.3 point, down from last week when it averaged 4.12%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.36%.
Among the drivers for mortgage rates in the short term is the monthly jobs report being released on Dec. 7, Terrazas said. “Strong job and wage growth data on Friday could easily erase the downward movement in rates seen over the past week,” he predicted.