Concerns over the Delta option lead to 30-year mortgage rates hitting 2.77%

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The average 30-year fixed-rate mortgage fell to 2.77% in the week ending August 5, according to mortgage rate data released Thursday. Freddie MacPMMS.

A week earlier, mortgage rates were bounced a little up to 2.80%. Freddie Mac’s chief economist Sam Hater said concerns over the COVID-19 Delta option, along with lower yields on 10-year Treasuries, have driven rates down.

“With the global market uncertainty surrounding the COVID-19 Delta Option, we saw a decline in the yield on 10-year Treasury bonds, and therefore mortgage rates followed suit,” Hather said. “The 30-year fixed rate mortgage dropped to early 2021 levels, while the 15-year fixed rate remained at an all-time low. This is a good sign for those who still want to refinance, renovate or even buy a new home. “

A year ago at this time, the average rate on a mortgage with a fixed interest rate for 30 years was 2.88%. The 15-year fixed rate mortgage was unchanged from a week earlier at 2.10%.

Mortgage rates remained persistently low, barely exceeding 3%, which contradicts forecasts that they will return to higher levels by 2021. Economists and Investors waiting for any indication that The federal reserve may begin to cut back on purchases of assets.

But the central bank has not indicated that it will change its monthly purchases of $ 120 billion in US Treasury bonds and mortgage-backed securities, at least until significant further progress produced in the labor market.

Fluctuations in prices for some products, for example lumber, heightened fears that inflation would be more widespread. Federal Reserve Chairman Jerome Powell called the rise in prices temporary, noting that it is limited to certain segments of the economy.

IN HousingWire Daily Podcast, Ajita Atreya, Senior Economist at Freddie Mac, said she agreed with this assessment.

“We are in a camp that thinks the inflationary pressures we are seeing now are temporary, but definitely something we should look out for because it will have serious implications for the housing market, and especially if the Fed decides to fix it. – said Atreya.

Despite the continued lenient Fed stance, the housing market is showing signs of cooling.

Mortgage applications tracked by the Mortgage Bankers Association fell 1.7% in week ending 30 Julydespite the fact that the 30-year fixed rate fell to its lowest level in about six months.

Just a week earlier, the number of applications increased by 5.7%, which was facilitated by a decrease in mortgage interest rates.

Mike Fratantoni, senior vice president and chief economist for the MBA, said the decline in mortgage applications could be attributed to the market valuation of the latest COVID-19 delta variant.

“30-year mortgage rates fell below 3% in our survey for the first time since February, providing an opportunity for many homeowners who have not refinanced yet to lower their rates and payments,” Fratantoni said. “Refinancing order volume fell slightly after a 11% jump last week, while buy order volume declined again, reflecting an ongoing stock shortage that continues to drive home prices skyrocketing across the country.”

But low rates had little impact on the buying market as house prices continue to rise. The seasonally adjusted purchasing index was down 2 percent from a week earlier, according to the MBA.

Housing prices rose across the board in May, jumping 16.6% over the past year. Case-Schiller S&P CoreLogic National House Price Index report, marking the 12th consecutive month of price increases.

“A month ago I described April’s performance as ‘truly extraordinary’ and this month I found myself running out of superlatives,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI. “Previously, we assumed that the growth in the US housing market was partly due to the response to the COVID pandemic, as potential buyers move from city apartments to suburban homes. May’s data is still consistent with this hypothesis. “



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