Mortgage rates are dropping today, but not necessarily this week.
Mortgage loan rates fell Again today, as the bond market continues to post surprisingly high levels over the past 2 weeks. This strength was not always apparent, as rates were in fact rallying from Friday to Tuesday. However, they have since fallen to the recent lows recorded on Thursday, July 8th. The key word here is “meet”, since the average lender is definitely not below that yet.
In other words, mortgage rates today may be lower, but they are better described as “flat to slightly taller” on a weekly basis. This contrasts with Freddie Mac’s weekly poll released this morning showing a 0.02% decline over the week, but as always, Freddie’s poll methodology means we’re not really looking at Thursday and Thursday. Instead, Freddie’s rate tends to capture the rate change from the first business day of any given week to the first business day of the next week. This is in good agreement with our more detailed data on daily rates, where rates on Monday were indeed lower than last Tuesday (banks were closed on Monday for Independence Day).
As for the levels, Freddie has a 30-year term. 2.88%, but this is slightly below average for several reasons. First, it assumes 0.7 for parentage. It also assumes the best available rate, which means it only applies to flawless buying scenarios. By the time we adjust our refinancing and initial financing costs, the actual effective rate will still be just over 3%… However, keep in mind that lenders are still far more stratified than usual.