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Time for clients to refi? Economic volatility drives mortgage rates below 4%

As the bond market drives yields down because of the economic turmoil, mortgage rates moved in concert, dropping below 4% for the first time since January 2018, according to Freddie Mac.

30-Year FRM 15-Year FRM 5/1-Year ARM
Average Rates 3.99% 3.46% 3.60%
Fees & Points 0.5 0.5 0.4
Margin N/A N/A 2.75

"While economic data points to continued strength, financial sentiment is weakening with the spread between the 10-year and the 3-month Treasury bill narrowing as fears of the impact of the trade war with China grow. Lower rates should, however, give a boost to the housing market, which has been on the upswing with both existing- and new-home sales picking up recently," Sam Khater, Freddie Mac's chief economist, said in a press release.

The 30-year fixed-rate mortgage averaged 3.99% for the week ending May 30, down from last week when it averaged 4.06%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.56%.

Rates fall

The 15-year fixed-rate mortgage averaged 3.46%, down from last week when it averaged 3.51%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.06%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.6% with an average 0.4 point, down from last week when it averaged 3.68%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.8%.

Mortgage rates fell last week, but not as far as expected, Matthew Speakman, an economic analyst at Zillow, said when that company released its rate tracker.

"The yield curve inversion exacerbated the movement of money into the bond market by investors. Even though rates did not fall as much as expected, there are a variety of explanations for this deviation — including conversations having to do with the potential reprivatization of Fannie Mae and Freddie Mac," Speakman said. "To be sure, yields and rates are still strongly correlated, but given this recent trend, any sharp rebounds in Treasurys will likely only result in subtle increase in rates."

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