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Mortgage rates lower than expected

Posted on Thursday, February 4, 2016 at 10:08:42 AM

Mortgage rates continue to defy all expectations. Freddie Mac released the results of its latest Primary Mortgage Market Survey on Thursday, showing that mortgage rates dropped for the fifth consecutive week amid uncertainty in global markets.

"Market volatility - and the associated flight to quality - continued unabated this week," said Sean Becketti, Freddie Mac chief economist. "The yield on the 10-year Treasury dropped another 15 basis points, and the 30-year mortgage rate fell 7 basis points as well, to 3.72 percent."

The average 30-year fixed rate mortgage is now at its lowest point since April 2015, when it averaged 3.68 percent.

"Both the Treasury yield and the mortgage rate now are in the neighborhood of early-2015 lows. These declines are not what the market anticipated when the Fed raised the Federal funds rate in December," Becketti continued. "For now, though, sub-4 percent mortgage rates are providing a longer-than-expected opportunity for mortgage borrowers to refinance."

Meanwhile, mortgage applications reversed trend after multiple weeks of steady increases. According to the Mortgage Bankers Association's weekly survey, applications for residential financing fell 2.6 percent from one week earlier. 

The share of applications for FHA loans in overall mortgage activity increased from 12.7 percent one week prior to 12.9 percent for the week ending Jan. 29.