As tensions escalated with America’s trading partners, long-term mortgage rates plunged and now stand lower than they’ve been since 2017. The outlook for the second half of this year is for interest rates to remain near their current levels. Attractive rates are making it beneficial for borrowers on trillions of dollars in loans to refinance.
Thirty-year fixed rates average 3.82 percent in this week’s Primary Mortgage Market Survey from Freddie Mac. Long-term rates sank 17 basis points from the previous week’s report and now stand at the lowest level since September 2017.
The 10-year Treasury yield, which is a benchmark for mortgage rates, has tumbled 12 BPS over the past week as the Trump administration ratcheted up its tariff threats against China and Mexico.
A look at today’s Treasury activity suggests that fixed mortgage rates are likely to be around the same in next week’s survey, while Freddie’s economists predict 30-year fixed rates will remain within 10 BPS of their current levels for the second half of this year.
The lower rates mean that monthly house payments for homebuyers will be less.
But even more impacted are potential refinances. Freddie Mac Chief Economist Sam Khater noted in today’s report, “With rates dipping below four percent, there are over $2 trillion of outstanding conforming conventional mortgages eligible to be refinanced – meaning the majority of what was originated in 2018 is now eligible.”
Falling rates have already impacted home lenders’ profitability, with the Mortgage Bankers Association reporting Thursday that independent residential lenders swung to a $285 profit per loan in the first quarter from a $200 loss in the final-three months of 2018. The improvement came as refinance share widened to 24 percent from 21 percent.
MBA reported Wednesday that weekly applications for refinances jumped 6 percent from a week earlier, while purchase applications were down 2 percent.
Sam Garcia is a 20-year mortgage news veteran who founded Mortgage Daily and served as its editor for two decades. Reach Sam at SamGarciaEmail@gmail.com