The global economy is on shaky grounds and that had an impact on the average long-term mortgage rates in the US, which is directed southward last week.
The declining saga continues from previous week to this week.
The average rate of a 30-year-old fixed rate mortgage, which was 3.8% a year ago, is currently at 3.62%, declining from 3.65% a week earlier.
This trend shows how choppy the markets are and under enormous pressure.
This is all due to a weak global economy & extremely unpredictable world stock market, which has seen a decline in all the primary equity markets around the world.
This has affected almost all kinds of bond rates too, the yield on a ten-year Treasury bond has declined below a 2% mark, which is significantly lower.
Sean Becketti economist, Freddie Mac said; “Since the start of this year, the 30-year rates have dropped almost 40 base points helping the mortgage markets sustain their momentum.”
As per the Commerce Department, sales of new homes slipped by 9.2% last month to a seasonally adjusted annual rate of 494,000.
But despite the decline in mortgage rates this year, the government data shows that Americans have held on to their purchase decision of new homes and thus a sharp decline noticed in western states which demand a price premium in general.
The benchmark yield stood at 1.75% on Wednesday, down from 1.81% last week. The yield fell further to 1.72% Thursday morning.
That compares with 2.27% of the Federal’s rate increase on Dec 16th.Despite the Federal Reserve’s decision to raise interest rates at the end of last year, mortgage rates have continued to slide.
The charges for a 15-year loan was unchanged at 0.5 points, whereas the average costs for a 30-year mortgage rose to 0.6 points from 0.5 points last week.
Volatility in financial markets are driven by concerns about a shaky global economy and the declining price of oil has pushed investors towards U.S. Treasuries, which in turn has kept rates low for potential home buyers creating Mortgage rates to fall for the 6th straight week, hitting a 10-month low.