Mortgage rates fall to 16-month low
Mortgage interest rates took a dive to a 16-month low during a quiet week that included the Columbus Day bank holiday on Monday.
30 year fixed rate mortgage – 3 month trend
- The benchmark 30-year fixed-rate mortgage fell to 4.01 percent from 4.18 percent last week, according to the Bankrate.com national survey of large lenders. The last time it was lower was May 29, 2013, at 3.99 percent. One year ago, that rate was 4.42 percent. Four weeks ago, it was 4.33 percent. The mortgages in this week's survey had an average total of 0.23 discount and origination points.
- The benchmark 15-year fixed-rate mortgage dropped to 3.23 percent from 3.37 percent last week.
- The benchmark 5/1 adjustable-rate mortgage fell to 3.09 percent from 3.27 percent.
- The benchmark 30-year fixed-rate jumbo loan dropped to 4.09 percent from 4.21 percent.
Stocks, bonds, rates
The week's sharp sell-off on Wall Street might have triggered the rate dip, says Jim Sahnger, a mortgage originator for Schaffer Mortgage in Palm Beach Gardens, Florida. As investors reallocate assets from stocks to bonds, bonds become pricier, sending yields -- and market interest rates -- lower.
"A dollar is always looking for a home," Sahnger says. "If you're concerned that asset values will decline, you'll put money into bonds, and interest rates are reaping the benefit of that right now."
Other concerns might include the arrival of the Ebola virus in the United States, violence and political turmoil in the Middle East and other geopolitical hot topics.
Such uncertainty can impact mortgage interest rates both up and down, Sahnger explains.
"Just as quickly as (an issue) can have downward pressure, people can decide it's not a big deal and rates can pop back up. It doesn't take a lot of time for that to happen," he says.
Whether lenders might have room to drop rates a bit further is an open question.
Rates might remain range-bound for the remainder of the year, barring a major shift in the U.S. economy or global political situation, says Kirk Chivas, chief operating officer at First Commerce Financial, a mortgage company in Wixom, Michigan.
"I don't see anything drastic happening that says we can get out of the 4 percent to 4.25 percent for a 30-year fixed-rate loan that we are in right now. We've been stuck here a long time," he says.
That range might be fine for homebuyers, though it hasn't fueled much excitement among homeowners, many of whom have already refinanced to even lower rates.
Recovery to resume
Consumers were slightly more optimistic about housing in September compared with August, according to the results of Fannie Mae's latest monthly telephone poll of 1,000 U.S. homeowners and renters.
The percentage of respondents who said now was a good time to buy a home hit 68 percent in September, a 4-point rise from August.
In a prepared statement, Fannie Mae Chief Economist Doug Duncan said, "The return to an upward trend in housing sentiment, combined with this month's positive news on the jobs front, suggests that a broad-based, albeit measured, housing recovery is still on track to resume in 2015."