Average fixed mortgage rates declined this week, nearing this year’s lows as well as the record low after nudging slightly higher for three consecutive weeks, according to Freddie Mac [1]’s weekly Primary Mortgage Market Survey [2]. The drop could be the result of a lower-than-expected second-quarter GDP. [3]
For the week ending August 4, 30-year fixed-rate mortgages averaged 3.43 percent, down from the previous week’s 3.48 percent and the previous year 3.91 percent. The 3.43 percent average 30-year FRM is only 12 basis points above the all-time low set in late 2012.
Also down by half a percent from the previous week were 15-year FRMs, which averaged 2.74 percent this week 3.13 percent a year ago; and 5-year Treasury-indexed hybrid adjustable-rate mortgage, which averaged 2.73 percent this week. A year ago, the 5-year ARM averaged 2.94 percent.
Lackluster GDP growth is partially responsible for the decline in mortgage rates, according to Freddie Mac. The first estimate for the GDP in Q2, released last week, was 1.2 percent, a slight uptick from Q1’s final reading of 1.1 percent but still widely considered a disappointment by economists and analysts.
"Treasury yields fell last week following both the Federal Reserve’s Open Market Committee [4]’s meeting and a disappointing advance estimate for second quarter GDP,” said Sean Becketti, chief economist, Freddie Mac.
The latest Weekly Applications Survey results from the Mortgage Bankers Association show refinance activity up 55 percent since last year.
According to that Mortgage Bankers Association's Weekly Mortgage Applications Survey [5], mortgage applications decreased on a seasonally adjusted basis by 3.5 percent as of July 29. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier to the lowest level since February, while the seasonally adjusted Government Purchase Index fell to the lowest level since last November.
The refinance share of mortgage activity decreased to 60.7 percent of total applications from 61.1 percent the previous week. The adjustable-rate mortgage share of activity remained unchanged at 4.7 percent of total applications, according to the MBA.
Refi volume, however, is still up 55 percent over a year ago.