Mortgage Rates Head Further South

Yesterday’s dramatic news of a 25 percent-plus spike in mortgage applications has been followed by today’s dismal news of average fixed mortgage rates spending their 11th consecutive week below the four percent level.

According to the latest Primary Mortgage Market Survey (PMMS) issued by Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 3.76 percent with an average 0.6 point for the week ending Oct. 8, down from last week’s 3.85 percent average and very far down from last year’s 4.19 percent average. Even worse, the 15-year FRM fell below the three percent level for the first time six months: this week it averaged 2.99 percent with an average 0.6 point, down from last week when it averaged 3.07 percent. A year ago at this time, the 15-year FRM averaged 3.36 percent.

Freddie Mac also reported that the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.88 percent this week with an average 0.4 point, down from 2.91 percent last week. A year ago, the five-year ARM averaged 3.06 percent. But the one slightly bright spot came with the one-year Treasury-indexed ARM, which averaged 2.55 percent this week with an average 0.2 point, up from 2.53 percent last week. At this time last year, the one-year ARM averaged 2.42 percent.

Sean Becketti, chief economist, Freddie Mac, blamed the low rates on a dreary employment environment.

“Calling the September jobs report disappointing is an understatement,” said Becketti. “The sputtering U.S. economy added only 142,000 jobs. To make matters worse, there were downward revisions to the prior two months. Hourly wages were flat, and the labor force participation rate fell to 62.4 percent, the lowest rate since 1977. In response, Treasury yields dipped below two percent triggering a nine basis point tumble in the 30-year mortgage rate to 3.76 percent.”