Mortgage rates barely moved over the past week as the US economic recovery hit summer turmoil and its glowing momentum slowed from the spring.
According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage fell for the weekly period through August 19, down 2.86%. A week earlier the average was 2.87%, a year ago the 30-year fixed interest rate was 2.99%.
The latest consumer sentiment index and lower-than-expected retail sales in July showed a weakening of the economic recovery and stifled any excitement that would lead to an interest rate hike. The steadily increasing number of new COVID-19 cases has created a barrier to economic activity, according to Zillow economist Matthew Speakman. In the meantime, markets may wait for the central bank's reaction to the July data before taking any action.
“These numbers came after the Federal Reserve last met and issued an official statement, so investors are eagerly awaiting signals as to how or if these reports might induce the Fed to end its alleged monetary tightening plans of the year. ”“ Speakman said in a statement.
Minutes of the July meeting of the Federal Reserve Open Market Committee indicated that some members felt the economy may be near a point where throttling on mortgage-backed securities and other bond purchases could begin as early as this year. However, the minutes released this week also showed that the Committee was well aware of the fragility of the economic recovery.
Regarding the impact of the pandemic, several participants said they would adjust their views on the appropriate avenue for acquiring assets if the economic impact of new strains of the virus turns out to be significantly worse than currently anticipated and significantly hampers progress towards it would be the goals of the committee, "said the committee.
However, the real estate market retains its momentum, fueled this year by home buyers hoping for cheap interest rates. Demand has led to limited supply and record price increases for both real estate on the market and new builds.
"While there is strong latent demand, low supply has pushed prices up as shortages limit sales activity that would otherwise take place," said Sam Khater, Freddie Mac's chief economist.
Other types of interest also showed minimal movements in the past week. The 15-year fixed-rate mortgage rose one basis point from 2.15% to 2.16%. In the same weekly period a year ago, the 15-year rate was 2.54%.
The 5-year Treasury-indexed adjustable rate mortgage declined 1 basis point to 2.43%, down from 2.44% a week earlier. A year ago the rate was 2.91%.