The 30-year fixed-rate mortgage fell to its lowest level since November 2016, according to Freddie Mac's Primary Mortgage Market survey. The report said that the 30-year fixed-rate mortgage fell to 3.6% during the week. A year ago, the 30-year fixed-rate mortgage averaged 4.59% during the same period.
The 15-year fixed-rate mortgage also trended downwards at 3.05% from 4.05% during the same period last year. According to Sam Khater, Chief Economist at Freddie Mac, the downward revision of mortgage rates signified a tug of war between business and consumer sentiments.
"Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall," Khater observed.
According to Danielle Hale, Chief Economist for realtor.com, escalating trade tensions were also responsible for the low mortgage rates. "Although this is good news for homebuyers who are confident in their financial situation, the longer trade uncertainty persists, the more likely it is to impact U.S. economic growth and potentially spill over to consumer confidence," she said.
The Freddie Mac report also indicated a slide in the 5-year Treasury-indexed hybrid adjustable mortgage rates (ARMs). The report indicated that ARMs fell 0.3 points during the week to 3.36%. A year ago at this time, the 5-year ARM was 3.9%.
Hale further observed that consumer confidence would be key to how the market plays out going forward.
"So far, the economy has continued to grow despite the trade hurdles, but consumer confidence has had an unsteady response to the rising and falling of trade tensions," Hale said. "Looking forward, home sales are well-positioned to surpass last year’s levels as buyers have a healthy labor market, growing incomes, and stronger purchasing power from lower mortgage rates, but a big hit to buyer confidence from renewed tensions could derail their trajectory."