WASHINGTON – Mortgage rates continued to fall this week, tracking the decline in Treasury yields as the bond market continues to signal concerns about the strength of the recovery from the pandemic recession.
Mortgage buyer Freddie Mac said Thursday that the average for a 30-year home loan fell to 2.90% from 2.98% last week. For comparison, a year ago the rate was 3.03%.
The rate on a 15-year loan, a popular mortgage refinancing option among homeowners, fell to 2.20% from 2.26% last week. Freddie Mac economists expect economic growth will gradually lead to higher mortgage rates in the second half of the year.
The bond market has been signaling fears of an economic recovery for several months now, in particular that it may have peaked and is now leveling off to a more sustainable pace. Home loan rates typically track the change in the yield on 10-year Treasury bonds, which rises when bond prices fall. Underlying profitability has been steadily declining in recent weeks as traders move money into bonds. It was quoted at 1.30% at noon Thursday after trading at 1.74% in late March.
Market concerns also spilled over into stocks, which fell broadly on Thursday as investors cautioned after the market hit a series of record highs last week.
The government’s labor market report last week in June showed that an encouraging surge in hiring, US employers added 850,000 jobs. This was well above the average for the previous three months and indicated that companies might find it harder to find enough workers to fill open vacancies. But on Thursday, the Labor Department said the number of Americans seeking unemployment benefits rose 2,000 last week from the previous week to 373,000.