Mortgage rates are in a free fall.
Rates hit their lowest levels since May 2013 according to Freddie Mac’s most recent survey. The 30-year national average dropped to 3.80%, the lowest in 19 months.
The 15 year fixed rate mortgage also came in much lower at 3.09% from 3.20%. The 15 year average isn’t very far from breaking the 3.00% floor. The 1-Yr ARM dropped two basis points to 2.38%.
The fall was largely due to troubles in the stock market earlier in the week as oil prices saw sharp declines. Yet after the Fed announced a more accommodating position after their two-day FOMC meetings, the the Dow recovered nicely with the highest one-point gain since 2011.
Yet mortgage rates didn’t respond accordingly and kept near their low marks. Investors looking for signs to get back into equities thought they may have seen a few, fueling the run.
The next two weeks will be short on trading days due to the holidays, with Existing Home Sales and a third revision of the GDP for Q3 being the only reports this week of any significance. And if the Fed is concerned at all about retail inflation, last week’s CPI number recorded the biggest decline in almost six years, following the slide in prices at the pump.
The Labor Department reported the Consumer Price Index dropped by 0.3 percent. Food and energy prices are removed to obtain the Core CPI number and without considering either, CPI actually rose by 0.1%, still well below the Fed’s 2.00% target rate.
Mortgage rates should remain fairly calm over the holidays yet could fall a bit further if Russia’s economy continues its slide. There’s debate as to how much Russia’s economy could infect Europe and other countries but there is no doubt it will make some waves.
If rates do drop, don’t expect them to fall by very much. Although the 15 year fixed rate is at 3.09%, to get them below the 3.00% mark would mean another one-week fall similar to the one witnessed last week.