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Mortgage Rates Fall to Lowest Levels of the Year
Mortgage rates edged down to their lowest levels of the year last week, according to Freddie Mac's Primary Mortgage Market Survey, reflecting recent concerns about the future course of the U.S. economy.
The 30-year fixed-rate mortgage was down to 6.14% for the week ending on Thursday, March 8, down from 6.18% for the prior week and 6.37% one year earlier.
One-year Treasury-indexed ARMs averaged 5.47%, down from 5.49% in the previous week, but up from 5.45% a year ago.
Frank Nothaft, chief economist for Freddie Mac, attributed the recent slide in mortgage rates to “volatility in overseas markets” leading to “questions about implications for the U.S. economy.”
“Uncertainties about the strength of the economy dominated the effects of other indicators, such as January’s personal income growth and core inflation rate measured through the personal consumption report,” he said. “Both increased at rates faster than had been expected, and potentially would have put upward pressure on interest rates. But the flight to quality due to the stock market’s fall pushed bond yields down instead.”
Nothaft predicted that growth of the Gross Domestic Product would accelerate in the first half of this year to 2.6% and average 3% for the year, “as excess business inventories are worked off and the drag from residential investment diminishes.” Even so, “we do not foresee significant movements in mortgage rates,” he said, “with rates on 30-year fixed-rate mortgages averaging between 6.3% and 6.4% for the remainder of the year.”
In the Federal Reserve’s Beige Book released on March 7, reports from business and other contacts around the country indicated ongoing weakness in the housing market, but signs of stabilization in several Fed districts.
Contacts for the report noted construction flattening out in Cleveland and Atlanta. San Francisco noted a slowdown in deteriorating conditions, but also cited price declines in some areas. Builders in New Jersey reported some stabilization in the new home market and demand for multifamily units remained strong in New York City.
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