Mortgage rates dropped further below 6 percent this week as weak job growth hinted at economic stagnation, according to surveys conducted by mortgage buyer Freddie Mac and Bankrate.
In Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage averaged 5.85 percent, down from 5.99 percent a week earlier. This average was the lowest since early April. The 15-year fixed-rate mortgage dropped to 5.24 percent from 5.4 percent last week. Points on both the 30- and 15-year averaged 0.6.
One-year Treasury-indexed adjustable-rate mortgages held steady at 4.08 percent this week, with an average 0.6 point.
“Last Friday’s unexpectedly weak employment report caused interest rates on long-term Treasury bonds and, by extension, mortgage rates, to fall as investors worried about the health of the U.S. economy,” said Freddie Mac economist Amy Crews Cutts.
In Bankrate.com’s weekly survey of large lenders, fixed mortgage rates dropped sharply in response to weak job growth during July, falling below the 6 percent threshold for the first time since April 14. The average 30-year fixed rate mortgage fell to 5.91 percent, the lowest since April 7, according to Bankrate.com. The 30-year fixed-rate mortgages in this week’s survey had an average of 0.31 discount and origination points.
The 15-year fixed-rate mortgage, which is popular for refinancing, fell from 5.42 percent to 5.3 percent. The average rate for the jumbo 30-year fixed-rate mortgage dropped from 6.22 percent to 6.12 percent, and the average one-year adjustable-rate mortgage sank to 4.15 percent from 4.35 percent.
The second consecutive disappointing employment report drove mortgage rates down as the overall strength of the economic recovery was called into question. Mortgage rates are closely related to long-term government bond yields, not the short-term interest rate controlled by the Federal Reserve’s rate-setting committee. Since June 30, the Federal Open Market Committee has raised short-term interest rates by one-half percentage point. In that same time, the average 30-year fixed rate mortgage has fallen substantially, from 6.3 percent to 5.91 percent.
The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.
New York – 5.93 percent with 0.01 point
Los Angeles – 5.96 percent with 0.45 point
Chicago – 5.98 percent with no points
San Francisco – 5.93 percent with 0.28 point
Philadelphia – 5.86 percent with 0.25 point
Detroit – 5.88 percent with 0.25 point
Boston – 6 percent with no points
Houston – 5.82 percent with 0.83 point
Dallas – 5.88 percent with 0.54 point
Washington, D.C. – 5.84 percent with 0.53 point
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