Mortgage rates hit their lowest levels since November 2016 on the heels of the Federal Reserve meeting last week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.73% 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 3.84% week ago and 4.55% a year ago. The 30-year fixed rate has fallen in seven of the last nine weeks.
The 15-year fixed-rate average dropped to 3.16% with an average 0.5 point. It was 3.25% a week ago and 4.04% a year ago. The five-year adjustable-rate average fell to 3.39% with an average 0.4 point. It was 3.48% a week ago and 3.87% a year ago.
"Rates have fallen consistently over the past several weeks, and that trend continued in the days following the Fed's suggestion of a near-term cut to the federal funds rate," said Matthew Speakman, a Zillow economist.
As expected, mortgage rates tumbled soon after the Federal Reserve met last week. The central bank left its benchmark rate untouched but expressed concern about inflation, slowing global growth and a trade war. The Fed does not set mortgage rates, but its actions influence them.
Rates also weren't helped by recent economic data.
"Tuesday's disappointing release of consumer confidence figures - the lowest reading in nearly two years - pushed treasury yields down, and mortgage rates followed suit," Speakman said. "Looking ahead, the risk to rates is to the upside. Markets are increasingly confident that this week's G-20 summit will yield a trade agreement between the U.S. and China, something that many believe will boost spending and support global economic activity. Rates also would likely rise if inflation data, due Friday, show meaningful improvement."
However, rates tend to pause during a holiday week. Bankrate.com, which puts out a weekly mortgage rate trend index, found that nearly three-quarters of the experts it surveyed say rates will remain relatively stable in the coming week.
"With the June Fed meeting behind us, markets are focusing on the upcoming G-20 meeting and trade negotiations between China and the U.S. heading into that meeting," said Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Maryland. "Treasury yields and mortgage rates have been level to slightly higher since the Fed meeting. It looks like they are consolidating at current levels and are awaiting news on trade negotiations to make their next move. Because of this, I think mortgage rates will be flat in the coming week."
Meanwhile, mortgage applications picked up. According to the latest data from the Mortgage Bankers Association, the market composite index - a measure of total loan application volume - increased 1.3% from a week earlier. The refinance index rose 3% from the previous week, while the purchase index slipped 1 percent.
Homeowners avail of refinancing
The refinance share of mortgage activity accounted for 51.5% of all applications.
"Mortgage rates fell again for most loan types, leading to a 3% weekly increase in refinances and a 92% jump year-over-year," said Bob Broeksmit, MBA president and CEO. "For home shoppers, the housing market this summer has been a mixed bag. Purchase applications - while up 9% from a year ago - have recently declined on a weekly basis. Affordability challenges, tight supply and some unease about the direction of the economy continue to slow some would-be buyers."