WASHINGTON – Average U.S. long-term mortgage rates arrested their five-week decline this week but the benchmark 30-year loan remained below 4 per cent.
Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year mortgage rose to 3.98 per cent from 3.92 per cent last week. It remained at its lowest level since June 2013. The rate stood at 4.53 per cent back in January.
The average for a 15-year mortgage, a popular choice for people who are refinancing, increased to 3.13 per cent from 3.08 per cent.
The sustained decline in long-term rates sparked a boomlet of homeowners looking to refinance mortgages. Homeowners eager for a bargain rate fired off inquiries to lenders. Applications for “re-fi’s” jumped 23 per cent in the week ended Oct. 17 — reaching their highest level since November 2013, according to the Mortgage Bankers Association.
But refinance applications fell 7 per cent in the latest week, ended Oct. 24.
In recent weeks concern over global economic weaknesses brought market turmoil and sent investors seeking safety by pouring money into U.S. Treasurys. Higher demand drives up prices for those government bonds and causes their yields to drop. The yield on the 10-year Treasury note touched new lows. Mortgage rates often follow the yield in the 10-year note.
This week, the 10-year note rose to 2.32 per cent Wednesday from 2.22 per cent the previous week. The note traded at 2.29 per cent Thursday morning.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 per cent of the loan amount.
The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.
The average rate on a five-year adjustable-rate mortgage rose to 2.94 per cent from 2.91 per cent. The fee was steady at 0.5 point.
For a one-year ARM, the average rate edged up to 2.43 per cent from to 2.41 per cent. The fee held at 0.4 point.