Mortgage rates start 2016 under 4 percent
Posted on Thursday, January 7, 2016 at 1:57:20 PM
Mortgage rates have begun 2016 on an encouraging note. Freddie Mac announced the results of its Primary Mortgage Market Survey on Thursday, showing that the 30-year fixed-rate mortgage fell back below four percent in the week ending Jan. 7.
With an average 0.6 point for the week, the 30-year FRM fell to 3.97 percent from 4.01 percent last week. At this time one year ago, it averaged 3.73 percent.
"Concerns about overseas economic developments have dominated financial markets to start the year. U.S. Treasury bond yields fell amidst a global equity selloff and flight to safety. In response, the 30-year mortgage rate dipped 4 basis points to 3.97 percent," said Sean Becketti, Freddie Mac's chief economist.
While mortgage rates saw a small dip, mortgage applications took a big tumble. According to the Mortgage Bankers Association's Market Composite Index, mortgage applications dropped 27 percent on a seasonally adjusted basis from two weeks earlier. The refinance index decreased 37 percent in the same time period.
The share of FHA loans in overall residential financing activity, meanwhile, increased from 13.8 percent to 14.6 percent.
Despite the plummet in applications, mortgages will weather the Federal Reserve's rate increase. Most analysts saw the fall as both a seasonal adjustment and a consumer reaction to the Fed's decision, rather than the increased rates themselves.