The average mortgage rate for 15-year, fixed-rate home loans edged up to 3.07% from 3.05% last week. Continued anxiety over the U.S.-China trade war and slowing global economic growth made for a rocky ride in the markets. On Wednesday, U.S. stocks plunged after the bond market sent out a fairly reliable warning signal of recession.
The whipsawed markets have sent investors fleeing from stocks to the safety of bonds, pushing bond interest rates to record lows. The yield on the key 10-year U.S. Treasury note — which influences long-term mortgage rates — briefly fell Wednesday below the yield on the 2-year Treasury for the first time since 2007. That inverted yield curve suggests that bond investors expect growth to slow so much that the Federal Reserve will soon feel compelled to slash short-term rates to try to support the economy.
As a sign of economic pessimism, the inversion sent U.S. stocks tumbling Wednesday, with the Dow Jones Industrial Average diving 800 points, or 3%. The climate of low home borrowing rates has sparked a flurry of activity by prospective homebuyers as well as owners looking to refinance mortgages. Mortgage applications for home purchases increased 2% in the week ended Aug. 9 from a week earlier, the Mortgage Bankers Association reported. Refinance applications jumped 37% to a three-year high.
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 fell this week to 0.5 point from 0.6 point. The average fee for the 15-year mortgage was unchanged at 0.5 point. The average rate for five-year adjustable-rate mortgages slipped to 3.35% from 3.36% last week. The fee remained at 0.3 point.