The 30 year mortgage rate fell below 4.00% for the first time since June 2013 according to Freddie Mac’s weekly survey. Released each Thursday, Freddie Mac surveys lenders across the country to compile an industry average. The 30 year fixed rate fell sharply from 4.12% to 3.97% while the 15 year dropped a full 12 basis points to 3.18% from 3.30%.
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Investors did not expect lower mortgage rates prior to the end of Quantitative Easing, the government rate-suppressing program that ends later this month. Rates have held above 4.00% as investors look ahead to a rate environment that is not so heavily influenced by the government.
Wall Street has also taken a hit over the previous few weeks and has been extremely volatile. The Dow finished at 16,379 last week as the S&P 500 endured its longest weekly losing streak since 2011. As stocks fell, mortgage rates rallied. Favorable Fed comments helped stocks recover from much of their losses.
This will be a rather light week in terms of economic reports with perhaps the Consumer Price Index having some sort of impact, since it can signal future inflation. Premonitions of inflation are bad for rates. Yet CPI has been rather tame so far this year. In August, the CPI actually fell by -0.2%.
Both existing and new home sales numbers will be released this week as well. While healthy home sales might signal a robust future economy, don’t expect this report to have much sway on rates with all the other news going on.
Mortgage rates have resisted any strong moves higher and investors and lenders aren’t expecting any significant increase. Nor is it likely that rates will go much lower than they are. But in current market conditions, anything is possible.