Mortgage rates dipped slightly to a nearly three-year low because of concern about a potential global economic slowdown and some weak home sale news.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.75% with an average 0.5 point. Points are fees paid to a lender equal to 1% of the loan amount and are in addition to the interest rate. It was 3.81% a week ago and 4.54% a year ago.
The 15-year fixed-rate average declined to 3.18% with an average 0.5 point. It was 3.23% a week ago and 4.02% a year ago. The five-year adjustable rate average dropped to 3.47% with an average 0.4 point. It was 3.48% a week ago and 3.87% a year ago.
"This is good news for buyers, particularly when you compare rates to a year ago," said Danielle Hale, chief economist for Realtor.com. "Based on a typical listing of $316,000 with a 20% down payment, buyers today would pay $112 less for their principal and interest than they did a year ago."
However, she said, that doesn't account for rising home prices.
"If you factor in the higher price that buyers are paying this year compared to a year ago, you're still looking at a savings of $48 per month compared to what buyers would have paid for the average house at this time last year," Hale said.
On the other hand, she said, falling mortgage rates can be an indication of a weaker economy, which could have a negative impact on the housing market going forward.
However, Sam Khater, Freddie Mac's chief economist, said in a statement that he expects the lower mortgage rates to positively impact the housing market soon.
"Mortgage rates continued to hover near three-year lows and purchase application demand has responded, rising steadily over the last two months to the highest year-over-year change since the fall of 2017," he said. "While the improvement has yet to impact home sales, there's a clear firming of purchase demand that should translate into higher home sales in the second half of this year."
Analysts are also watching to see whether a potential move by the Federal Reserve next week to lower the benchmark interest rate to 2.1% from 2.35% would impact mortgage rates. Michael Borodinsky, vice president of Caliber Home Loans in Edison, New Jersey, said if that happens, mortgage rates wouldn't necessarily drop as well.
"The Federal Open Market Committee monetary policy only directly impacts short-term interest rates," Borodinsky said. "Mortgage rates are directly impacted by the direction of longer-term fixed-income instruments such as Treasury bonds and mortgage backed securities."