Freddie Mac reported Thursday that mortgage rates rose for the second consecutive week, with its latest Primary Mortgage Market Survey revealing the average rate for the 30-year fixed-rate mortgage to be 3.65%.
“Mortgage rates rose again this week as lenders increased prices to help manage skyrocketing refinance demand. This is expected to be a short-term phenomenon as lenders work through their backlog,” said Sam Khater, Freddie Mac’s Chief Economist. “On the purchase front, daily loan purchase applications were rising as of mid-February but started to decline last Friday.”
This most recent reading for the week ending on March 19 is an increase from the prior week’s 3.36%. The average 30-year fixed-rate mortgage for this week last year was 4.28%.
Average rates for a 15-year fixed-rate mortgage were 3.06%—up from the prior week’s 2.77% but lower than last year’s 3.71%.
Along with a drop in mortgage rates, the Mortgage Bankers Association (MBA) reported an 8.4% decline in mortgage applications from the prior week for the week ending on March 13.
Also seeing a decline is the Refinance Index, which fell 10% from the previous week but still 402%. The Purchase Index fell just 1% from the prior week.
Joel Kan, MBA’s AVP of Economic and Industry Forecasting, said the spread of COVID-19 is causing volatility and brought mortgage rates to their highest level since mid-February.
"The Federal Reserve's rate cut and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing,” Kan said. “Amidst these challenging times, the savings that households can gain from refinancing will help bolster their own financial circumstances and support the broader economy."
Kan added that the purchase market was on “firm footing” to start the year and has “held steady” through current uncertainty.
“Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates,” Kan said.
The MBA states the refinance share of mortgage activity fell 74.5% of the total applications, which is a slight decline form the prior week’s 76.5%.