Mortgage Rates Declined To 5-Month Low

Mortgage rates has slid with the benchmark 30-year fixed mortgage rate falling to a 5-month low of 4.15%, according to weekly national survey. The 30-year fixed mortgage has an average of 0.25 discount and origination points.

The survey also shows that “The larger jumbo 30-year fixed slid to 4.08%, and the average 15-year fixed mortgage rate dropped to 3.35%”. Adjustable mortgage rates have also been on decline, with the 5-year ARM lowering to 3.42% and the 7-year ARM returning to 3.62%, the rate as it was two weeks ago.

The long-term mortgage rates has been fallen for a 4th straight week, with the benchmark 30-year rate marking a new low for the year. USAToday reported that “Freddie Mac says the rate on 30-year fixed-rate home loans declined to 4.08% this week from 4.10% last week. That brought the rate under its previous 2017 low of 4.09% reached on Jan. 19”.

According to many analysts investors nervous and bring mortgage rates lower due to an expected “good old fashioned political crisis”. According to Bankrate, “mortgage rates are closely related to yields on long-term government bonds, which have been in high demand amid the turmoil in Washington“. The political scandals have been a catalyst for a significant drop in the past couple days. However, the mortgage rates has also went lower due to a slower than expected rise in consumer prices.

“Another factor helping keep long-term yields, and mortgage rates by extension, in check is that the Federal Reserve seems poised to raise short-term interest rates as soon as June”, explains Bankrate. Such increase can be seen as good news by long-term bond investors as it “keeps the inflation genie in the bottle”.

A monthly payment for a $200,000 loan is estimated at $972.21 at the current average 30-year fixed mortgage rate of 4.15%.

30-year fixed: 4.15% — down from 4.22% last week (avg. points: 0.25)
15-year fixed: 3.35% — down from 3.44% last week (avg. points: 0.21)
5/1 ARM: 3.42% — down from 3.48% last week (avg. points: 0.30)

When inflation is low, anyone who wants to borrow money can benefit from the low rates. Core consumer prices (excluding food and fuel) rose just 1.9% in April 2017 compared to the same period of the 2016. This is the lowest reading for the core Consumer Price Index since August 2015.

According to Greg McBride, chief financial analyst for “A lower-than-expected reading on consumer price inflation helped bring bond yields, and mortgage rates, a bit lower over the past week”. He says the Fed is keeping mortgage rates in check, too, because it’s poised to raise short-term interest rates next month. That would keep inflation under control, and put a lid on mortgage rates.

As for home construction, housing starts fell 2.6% in April.

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets.