The post-Brexit impact that pushed mortgage rates into historic lows continues to be felt in the US housing market, as the report from Freddie Mac’s Primary Mortgage Market Survey details on the week ending September 8.
The 30-year fixed-rate mortgage has maintained at the 3 percent level as it averaged 3.44 percent compared to last week’s 3.64 percent. At the same time, last year charted the average at 3.90 percent.
On the other hand, the 15-year fixed-rate mortgage concluded in 2.76 percent, a drop from last week’s average of 2.77 percent. Last year’s comparison ended at 3.10 percent, still a significant low.
Meanwhile, the 5-year adjustable rate mortgage tied up at a 2.81 median, still lower than last week’s 2.83 percent. A year ago, it concluded at 2.91 percent.
Refinancing activity remains active as borrowers take advantage of this flat flow of interest rates. Freddie Mac’s chief economist Sean Beckett says refinancing still accounted for over 60 percent of the total mortgage activity.
Analyzing the Trend
As good a news as it seemed, however, a sell-off in the US bond market has caused a noticeable spike in rates in this same week. This is said to be the biggest leap in two months. The pattern alarmed analysts, saying that it may threaten stable mortgage rates that have been anticipated after Brexit.
Higher rates could trigger homebuyers to lock in, fearing they might lose the opportunity as the trend continues its pace. At the same time, sellers are pressured to keep their rates competitive, else they lose potential buyers.
Factors Affecting Rate Levels
The anticipation of the Federal Reserve’s rate hike is seen as one factor that affects mortgage rate levels. However, the actual Fed rate hike does not automatically mean a spike in the rates.
Another factor that influences rates is the tight supply of available homes in the market. The cost of production including labor pushes the rates significantly and it is the current scenario in the housing market.
The new forecast might encourage others to lock in on current rates. Next week’s data may provide more insight that could help you reinforce your decision. Talk to lending professionals to learn more about the current refinancing climate.