The average rate this week for 15-year, fixed-rate home loans slipped to 3.56% from 3.57% last week. The decline made purchasing a home a lot cheaper, and potential buyers have been rushing to take advantage of the cheaper borrowing costs.
Lower mortgage rates, slowing home price increases and a pickup in the number of available homes appear to be rejuvenating home sales after a slowdown last year. An index measuring applications for mortgage loans soared 18.6% in the week ended March 29 from a week earlier, according to the Mortgage Bankers Association.
With economic growth showing signs of slowing in the U.S. and abroad, interest rates have eased. Reflecting dampened expectations for growth, the Federal Reserve recently left its key interest rate unchanged and signaled that it's unlikely to raise rates this year.
Fed Chairman Jerome Powell has said the U.S. economy faces several headwinds, including slowing global growth, a trade war with China and fading impacts from the tax cuts that took effect last year. Mortgage costs are more directly influenced by the yield on the 10-year Treasury note, which rose last year as many investors shifted money into stocks. Bond yields rise as prices fall.
The yield on the 10-year note has fallen sharply since last year, when it touched 3.21% in November. It was at 2.51% around midday Thursday, up from 2.39% a week earlier. Freddie Mac surveys lenders across the country between Monday and Wednesday each week to compile its mortgage rate figures.
The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. The average fee on 30-year fixed-rate mortgages was unchanged this week at 0.5 point. The average fee for the 15-year mortgage also was steady, at 0.4 point.
The average rate for five-year adjustable-rate mortgages fell to 3.66% from 3.75% last week. The fee increased to 0.4 point from 0.3 point.