Mortgage rates continue to fall, hitting lowest point in months

Mortgage rates slid for a second consecutive week, with 30- and 15-year fixed rates falling to levels not seen since winter, as mixed jobs data pointed to signs of a potentially softening economy.

The 30-year fixed rate mortgage averaged 2.9% for the weekly period ending July 8, down eight basis points from 2.98% the previous week, according to the results of Freddie Mac’s Primary Mortgage Market Survey. One year ago, the 30-year average came in at 3.03%. While rising inflation concerns in the spring seemed to set the stage for interest rates to climb, the opposite occurred, with rates falling four out of the last five weeks.

“All told, mortgage rates now sit near their lowest level since February, fully reversing the sharp upward movements from earlier in the year,” said Zillow economist Matthew Speakman in a statement. “While longer-term changes in rates are likely to be to the upside, the shift in the market’s outlook suggests that rates have little reason to move sharply higher anytime soon.”

Although consumer prices rose in May at their fastest pace in over a decade, up-and-down employment data has tempered signs of quick economic growth. First-time unemployment claims came in higher than expected last week, even as employers added 850,000 jobs in June based on Bureau of Labor Statistics data. According to Speakman, lowered expectations on the amount of monetary or fiscal stimulus that the market would receive has also contributed to low mortgage rates.

Next week’s release of the June Consumer Price Index could provide some clarity to markets and economists regarding the rate of inflation and U.S. economic recovery. But current signs have some in the mortgage industry predicting little rate movement in the short term.

“We expect economic growth to gradually drive interest rates higher, but homebuyers and refinance borrowers still have an opportunity to take advantage of 30-year rates that are expected to continue to hover around 3%,” said Sam Khater, Freddie Mac chief economist, in a press release.

15-year and ARM rates also drop
Along with the decline in the 30-year average, the 15-year fixed-rate also decreased, falling to 2.2% — its lowest point since mid February. A week ago, the rate came in at 2.26% and stood at 2.51% during the same period last year,

The 5-year Treasury-indexed adjustable-rate mortgage edged down two basis points to 2.52% from 2.54% the prior week. In the same week a year ago, the 5/1 ARM posted an average of 3%.

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