Falling treasury yields helped drive mortgage rates down at the beginning of the year according to the Primary Mortgage Market Survey released by Freddie Mac on Thursday.
According to this weekly survey, 30-year fixed-rate mortgage (FRM) averaged 3.95 percent with an average 0.5 point for the week ending January 4, 2018, down from last week when it averaged 3.99 percent. A year ago at this time, the 30-year FRM averaged 4.20 percent.
The survey noted that the 15-year FRM averaged 3.38 percent with an average 0.5 point, down from last week when it averaged 3.44 percent. A year ago at this time, the 15-year FRM averaged 3.44 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.45 percent this week with an average 0.4 point, down from last week when it averaged 3.47 percent. A year ago at this time, the 5-year ARM averaged 3.33 percent the survey indicated.
“Despite increases in short-term interest rates, long-term interest rates remain subdued. The 30-year mortgage rate is down a quarter of a percentage point from where it was a year ago and the spread between the 30-year fixed and 5/1 adjustable rate mortgage is the lowest since 2009,” said Len Kiefer, Deputy Chief Economist at Freddie Mac.
Kiefer said that there wasn’t much upward pressure on long-term rates at the moment with the FOMC minutes showing continued support for gradual increases in policy rates from many participants and inflation rates remaining low.
“Whether that changes due to a tighter labor market and the economic impact of tax reform remains to be seen," he said.