Average mortgage rates fall, but could turn direction on trade news
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While rates on the 30-year fixed loan fell 9 basis points this past week, a different tracker released by Zillow rose 13 basis points in the same period.
“After a year-long slide, mortgage rates hit a cycle low in September 2019 and have risen in six out of the last nine weeks due to modestly better economic data and trade related optimism,” Sam Khater, Freddie Mac‘s chief economist, said in a press release. “The improvement in sentiment has been one of the main drivers behind the surge in equity prices and will provide a halo effect to consumer spending heading into the important holiday shopping season.”
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39% with an average 0.3 point, down from last week when it averaged 3.43%. A year ago at this time, the five-year adjustable-rate mortgage averaged 4.14%.
Zillow’s rate tracker had the 30-year FRM at 3.71% on Oct. 30, and that fell to 3.66% the next day.
Since then, it has been on the rise, reaching 3.79% on Nov. 6.
“It’s been a tumultuous seven days, with mortgage rates ultimately rising over the past week to reach their highest level in nearly three months,” said Zillow economist Matthew Speakman when that rate tracker was released. “Once again, the driving force behind these movements were trade discussions between the U.S. and China.
“Doubts surrounding the countries’ tentative, preliminary October pact pushed bond yields down sharply on Thursday, sending mortgage rates on their steepest one-day decline in months. But these rate reductions were almost entirely reversed by Tuesday, after newfound optimism surrounding the talks — specifically, reports that both sides were considering rolling back some tariffs — propelled rates to their highest level since early August.”
Even though positive domestic economic data also drove the rate increase, in general, this will not have the largest effect on rate movements in the short-term.
“More crucial data are due in the coming days — particularly a key reading on consumer sentiment — but if this week is any indication, it’s clear that trade-related developments will continue to drive mortgage rate movements for the near future,” Speakman said.