The average rate for a 30-year fixed-rate mortgage fell to 2.90% for the week ending July 8, its lowest level since mid-February.
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As Treasury yields have moved lower, so have mortgage rates. But don’t expect rates to stay this low, experts advise.
The average rate for a 30-year fixed-rate mortgage fell to 2.90% for the week ending July 8, its lowest level since mid-February, according to Freddie Mac’s Primary Mortgage Market Survey released Thursday. The rate is eight basis points lower than the week prior, and the lowest since the week ending Feb. 18. (One hundred basis points is one percentage point.)
The decline in rates has corresponded with sharp movements in the Treasuries market. The 10-year Treasury yield, with which mortgage rates are often correlated, has been declining since mid-May and has accelerated since the beginning of July. The decline could be related to concerns about future economic growth, Barron’s previously reported.
Despite the recent decline in mortgage rates, economists expect rates to rise by the end of the year. Freddie Mac chief economist Sam Khater said Thursday that he expects economic growth to drive interest rates higher. Freddie Mac’s most recent quarterly forecast, released in April, foresees interest on the 30-year fixed-rate mortgage ending the year at an average of 3.4%.
Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association, said weekly mortgage rates can be volatile and that any trends in recent numbers will be hard to pin down. The trade group expects the average 30-year fixed mortgage rate to end the year at 3.5%—a rate Kan said is low historically.
Keith Gumbinger, vice president at mortgage website HSH.com, said mortgage rates could continue to fall in the immediate future, “but the fundamentals that support higher rates remain in place.”
Fluctuations in the Treasuries market aren’t the only force that impacts mortgage rates, said Freddie Mac’s Khater. “While mortgage rates tend to follow Treasury yields closely, other factors can be impactful such as the labor markets, which are continuing to improve per last week’s jobs report,” the chief economist said in the release.
Home buyers and refinance borrowers still have time to take advantage of low rates, Khater noted. He expects 30-year interest rates to hover around 3% before they gradually climb higher.
Write to Shaina Mishkin at [email protected]
