Freddie Mac: Market Turmoil In China Pushed Mortgage Rates Down

Posted by Patrick Barnard on August 28, 2015 No Comments
Categories : Residential Mortgage

Market volatility stemming from economic turmoil in China pushed fixed mortgage rates slightly downward during the week ended Aug. 27, according to Freddie Mac's Primary Mortgage Market Survey.

The average rate for a 30-year fixed-rate mortgage (FRM) was 3.84%, down from 3.93% the previous week. A year ago at this time, the 30-year FRM averaged 4.10%.

The average rate for a 15-year FRM was 3.06%, down from 3.15% the week prior. A year ago at this time, the 15-year FRM averaged 3.25%.

The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was 2.90%, down from 2.94%. A year ago, the five-year ARM averaged 2.97%.

The average rate for a one-year Treasury-indexed ARM was 2.62%, unchanged from the previous week. At this time last year, the one-year ARM averaged 2.39%.

‘Events in China generated eye-catching volatility in equity markets worldwide over the past week,’ says Sean Becketti, chief economist for Freddie Mac, in a release. ‘Interest rates also rocked up and down – although to a lesser extent than equities – as investors alternated between flights to quality and bargain hunting among beaten-down stocks. Amidst all this confusion, the 30-year mortgage rate dropped to 3.84 percent, the lowest mark since May and the fifth consecutive week with a rate below four percent.’

Becketti cautions that due to the recent volatility, ‘mortgage rates could change up or down significantly by the time this report is released.’

‘There are indications, though, that the unsettled state of global markets will make the Fed think twice before taking any action on short-term interest rates in September,’ he says. ‘If that's the case, the 30-year mortgage rate may remain subdued in the short-to-medium term, providing support for continued strength in the housing sector. Just this week, new home sales were reported to be up 26 percent, year over year.’

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