Mortgage Rates Drop in Response to Overseas Volatility

Mortgage rates recently dropped in response to global uncertainty, helping to keep buyer activity strong toward the close of the homebuying season, according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®).

The results of the survey found the 30-year fixed-rate mortgage (FRM) averaging 4.04 percent, and the 15-year FRM averaging 3.20 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.93 percent. The 1-year Treasury-indexed ARM averaged 2.50 percent.

“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China,” explains Freddie Mac Chief Economist Sean Becketti. “Mortgage rates fell as well, although not by as much as government bond yields.

“Overseas volatility is likely to persist for some time, providing some restraint on potential U.S. rate increases. In addition, the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously–monitoring events both overseas and in the U.S. to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4 percent for a while.”

Source: Freddie Mac