You are here
US 30-year mortgage rates hit lowest level since October 2016
BORROWING costs on US 30-year fixed-rate mortgages fell to their lowest level since October 2016 in step with declining bond yields due to economic and trade worries, Freddie Mac said on Thursday.
The interest rates on 30-year mortgages averaged 3.49 per cent in the week ended Sept 5, down from 3.58 per cent a week ago and 4.54 per cent a year earlier, the mortgage finance agency said.
Declining mortgage rates are expected to offset rising prices and tight inventories that have clamped down home sales, analysts said.
"Mortgage rates continued the summer swoon due to weaker economic data," Sam Khater, Freddie Mac's chief economist, said in a statement.
While the trade conflict between China and the United States has hurt business activity, a sturdy domestic job market has buoyed consumer spending that accounts for more than two-thirds of the US economy, analysts said.
"The unemployment rate is low, housing affordability is improving, homebuyer demand is rising, and home price growth is stable," Mr Khater said.
At the current average rate, the monthly payment on a US$300,000, 30-year loan would be US$1,345. That's down from US$1,527 a year ago, when the rate was 4.54 per cent.
On Tuesday, benchmark 10-year Treasury yields fell to 1.429 per cent, their lowest level since July 2016, partly in response to a report from the Institute for Supply Management that showed the US manufacturing sector recorded its first monthly contraction since 2016.
Ten-year yields rose on Thursday, last at 1.567 per cent, on news that Beijing and Washington had agreed to hold trade talks in October, together with upbeat data on jobs and services activity.
Other mortgage costs Freddie Mac tracks also tracked lower from the previous week. The average interest rate on 15-year, fixed-rate mortgages fell to 3 per cent, the lowest since November 2016.
It was down from 3.06 per cent the week before and 3.99 per cent a year ago.
Borrowing costs on five-year adjustable rate loans averaged 3.3 per cent, down slightly from 3.31 per cent a week ago. REUTERS, BLOOMBERG