Mortgage rates fell yet again for the fourth straight week. They would have fallen a couple more basis points on Friday had the Unemployment Report and Non-Farm Payroll Jobs numbers not been as strong as they were. According to Freddie Mac, the average 30 year mortgage rate fell to 3.89%, the lowest since May of 2013.
In that month Fed Chair Ben Bernanke announced the eventual winding down of the quantitative easing program. That caused rates to rise at a pace not seen in 26 years. Yet 2014 was a different story. Since the first of this year, rates have been on a gradual decline.
The 15 year rate also moved lower from 3.17% to 3.10% while the 1-Year ARM was lowered by three basis points to 2.41%. Last January the 30 year rate stood at 4.53% and one year ago, 4.46%.
Russia announced last week it is in recession as the continuing slide in oil prices is hitting their economy where it hurts. Oil is the only real resource available to Russia that generates any income as their economy really doesn’t rely on any substantial manufacturing base. As well, China and Europe have recently announced further plans to stimulate their economies. Japan is not doing well either, reporting two consecutive quarters of negative growth.
The beneficiary of these lagging economies is the United States. The release of the November jobs numbers surprised most everyone. According to the Bureau of Labor, there were 321,000 new non-farm jobs created, much higher than the 230,000 or so expected.
Wall Street cheered the news with both the Dow and NASDAQ again closing at record highs. Due to the economic malaise abroad, U.S. stocks benefitted. Typically a hot stock market means higher rates as investors pull money from mortgage bonds to invest in higher return stocks. Yet international investors wish to park their assets in the U.S. with such a dismal international scene in view.
Oil prices are trading in their current sub-$70 range and Saudi Arabia refuses to cut production. Low oil prices will hurt Russia’s economy and investors worldwide have no better safety net than U.S. Treasuries and mortgage-backed securities. Unless the November payroll numbers hid some sort of an anomaly, we can expect mortgage rates to remain in this range for several weeks.