The average for the 30-year fixed-rate mortgage fell below 4 percent this week for the first time since the week of November 17, just days following the election of Donald Trump as president.
The move downward, which is good news for prospective homebuyers in a tight seller’s market in most communities, came as a bit of a surprise. Rates have been slipping despite a Federal Reserve rate hike just last month, and more likely looming later this year.
The average rate for a 30-year fixed-rate mortgage came in at 3.97 percent, down from 4.08 percent last week, according to Freddie Mac’s weekly report.
The week of the presidential election, the average mortgage rate stood at 3.57, very near all-time low. But the following week, the average surged to 3.94 percent in the wake of Trump’s victory during the week of Nov. 17.
What’s driving mortgage rates down? Rates are somewhat influenced by the Fed’s short-term interest rates. But in the near-term, they tied more closely to the 10-year U.S. Treasury bond market. Investors normally consider bonds much more safer bets than the more volatile stock market.
“Weak economic data and growing international tensions are driving investors out of riskier sectors and into Treasury securities,” said Sean Becketti, chief economist, Freddie Mac.”This shift in investment sentiment has propelled rates lower.”
The post-election bull market in equities is of concern to many investors.
“Investors are a little skeptical because the stock market keeps climbing,” Don Frommeyer, a mortgage officer at Marine Bank in Indianapolis, told Realtor.com. “They’re looking for safe ways to invest their money, and they’re going back to the bond market.”
The drop below 4 percent will likely be temporary, financial observers say, as the Fed continues to consider more hikes. However, the uncertain future of infrastructure spending, heralded by the Trump Administration and favored by equity investors, will continue to play a factor as well.
Here’s a rundown of Freddie Mac’s average rates for the week:
- 30-year fixed-rate mortgage (FRM) averaged 3.97 percent, with an average 0.5 point for the week ending April 20, 2017, down from last week when it averaged 4.08 percent. A year ago at this time, the 30-year FRM averaged 3.59 percent.
- 15-year FRM this week averaged 3.23 percent, with an average 0.5 point, down from last week when it averaged 3.34 percent. A year ago at this time, the 15-year FRM averaged 2.85 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.10 percent this week, with an average 0.4 point, down from last week when it averaged 3.18 percent. A year ago, the 5-year ARM averaged 2.81 percent.