Stock Shock Shakes Mortgage Rates

Freddie Mac  |   August 28, 2015

Fixed mortgage rates fell to the lowest level since May amid "substantial and ongoing global volatility out of China" this week, Freddie Mac reported in its weekly mortgage market survey. "Events in China generated eye-catching volatility in equity markets worldwide over the past week," says Sean Becketti, Freddie Mac's chief economist. "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 4 percent." Becketti also notes that the "unsettled state of global markets" will likely make the Federal Reserve rethink before taking any action on raising short-term interest rates in September as well. "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," Becketti says. Freddie Mac reported the following national averages with mortgage rates for the week ending Aug. 27: 30-year fixed-rate mortgages: averaged 3.84 percent with an average 0.6 point, dropping from last week's 3.93 percent average. A year ago, 30-year rates averaged 4.10 percent. 15-year fixed-rate mortgages: averaged 3.06 percent with an average 0.6 point, dropping from last week's 3.15 percent average. Last year at this time, 15-year rates averaged 3.25 percent. 5-year hybrid adjustable-rate mortgages: averaged 2.90 percent with an average 0.4 point, dropping from last week's 2.94 percent average. Last year at this time, 5-year ARMs averaged 2.97 percent. 1-year ARMs: averaged 2.62 percent with an average 0.3 point, holding the same average as last week. Last year at this time, 1-year ARMs averaged 2.39 percent.

Source: Freddie Mac