Average mortgage rates fall; 30-year home loan at 4.83%

WASHINGTON -- Long-term U.S. mortgage rates declined this week, in a quiet pause after weeks of market anxiety over rising interest rates.

According to data released Thursday by Freddie Mac -- the Federal Home Loan Mortgage Corp. -- the 30-year fixed-rate average slipped to 4.83 percent with an average 0.5 point. It was 4.86 percent a week ago and 3.94 percent a year ago.

The 15-year fixed-rate average fell to 4.23 percent with an average 0.5 point. It was 4.29 percent a week ago and 3.27 percent a year ago. The five-year adjustable-rate average fell to 4.04 percent with an average 0.3 point. It was 4.14 percent a week ago and 3.23 percent a year ago.

Points are fees paid to a lender equal to 1 percent of the loan amount.

"Mortgage rates declined slightly this week as continued market volatility caused bond rates to pause their upward trajectory," said Danielle Hale, chief economist at Realtor.com. "Stocks and bonds appear to be reacting to the cost increases businesses are facing, which has led to uncertainty over profitability. Today's lower mortgage rates are a mixed bag for housing. Builders are facing the same cost increases as other businesses. This is making it next to impossible to build entry-level homes, which could eventually hold back the homeownership growth rate."

Fueled by first-time home buyers, the homeownership rate rose to 64.4 percent in the third quarter. However, data are raising concerns about a slowdown in the housing market. Home-price gains were below 6 percent for the first time in a year, according to the most recent Case-Shiller home-price index. Existing- and new-home sales fell last month, while pending home sales were flat.

"While higher mortgage rates have led to a decline in home sales this year, the weakness has been concentrated in expensive segments versus entry-level and first-time buyer which remains firm throughout most of the rest of the country," Sam Khater, Freddie Mac's chief economist, said in a statement. "Despite higher mortgage rates, the monthly mortgage payment remains affordable. For many buyers the chronic lack of entry-level supply is a larger hurdle than higher mortgage rates because choices are limited and the inventory shortage has caused home prices to rise well above fundamentals."

Meanwhile, mortgage applications retreated, according to the latest data from the Mortgage Bankers Association. The market composite index -- a measure of total loan application volume -- declined 2.5 percent from a week earlier. The refinance index fell 4 percent from the previous week, while the purchase index dropped 2 percent.

The refinance share of mortgage activity accounted for 39.4 percent of all applications.

Information for this article was contributed by The Associated Press.

Business on 11/02/2018

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