According to Bankrate, the 30 year fixed rate mortgage (FRM) is down another 5 basis points since last week, and sits at 3.94%. Not surprisingly, the 15-year fixed rate mortgage also fell 6 basis points from 3.34% a week ago to 3.28%. Furthermore, 5/1-yr adjustable rate mortgages fell 9 basis points from 3.76% last week to 3.67% this week. This is the sixth consecutive week that mortgage rates have fallen and they currently sit at the lowest rates since September 2017.
According to Freddie Mac, the housing market will see modest growth over the next year and a half due to low mortgage rates and a strong labor market. Additionally, as a result of the increase in housing applications thus far this year, Freddie Mac expects a 20% increase (relative to 2018) in refinance mortgage originations this year. Below is a graph from Freddie Mac showing the U.S. weekly averages for 30-yr FRM, 15-yr FRM, and 5/1-yr ARM as of June 27, 2019.
One of the main factors affecting mortgage rates right now are trade disputes. Currently, the US has trade disputes or trade tensions with China, the European Union, Canada, Mexico, and India. As a result of trade tensions, markets suffer and investors lose because uncertainty is introduced, trade is suppressed, global growth is dampened and established supply chains are disrupted. Consequently, investors are shifting cash flows into bonds and out of stocks in order to mitigate risk. If investors continue to be wary of the market and invest in bonds, this is good news for mortgage rates.
