The average 30-year mortgage rate crept below the 4.00% mark again last week according to Freddie Mac’s weekly mortgage rate survey. Each week, the mortgage backing agency polls over 100 lenders across the country to get a pulse on rate movements.
The rate fell two basis points from 4.01% to 3.99% while the 15 year rate dropped a bit further to 3.17% from 3.20%. The 30 year rate has been below 4.00% four out of the last six weeks. This is not where rates were expected to be at the end of 2014. Analysts called for 5% rates by now, yet rates keep falling.
Concerns in Europe as well as Asia have helped keep demand for U.S. Treasuries and mortgage bonds relatively strong. A recent report out of Europe indicated the European economy grew at a scant 0.6% while Japan notched a -1.6% drop.
China also lowered a key interest rate to spur its economy. It seems the U.S. is the only major economy showing any signs of consistent growth. Both the Dow and the S&P 500 closed at record highs last week.
The markets will be shortened this week due to the Thanksgiving holiday and other than the second revision of Q3 GDP and Durable Goods orders there’s not a whole lot on the economic plate. Besides, economies and conflict abroad seem to sway mortgage rates more than domestic economic news these days.
Case in point, November was the first month since the closure of QE3 with no purchases of bonds by the Fed. Even without the massive amounts of bond buying by the Fed with the quantitative easing program mortgage rates have actually fallen.
For the remainder of the year, many expect rates to hover in their current range, with the 30 year bouncing above and below the 4.00% threshold. For 2015, as long as inflation is still kept in check, look for the Fed to sit on the sidelines with regard to major policy changes.