Current mortgage rates are dropping once again. The calendar year 2015 started out very kind for mortgage rates, as two leading surveys reported a significant decline across most types of home loan products, bringing interest rates much closer to their levels in May 2013 than their levels about one year ago to this date.
30-Year Fixed Mortgage Rate Improves to 3.73 Percent
In Freddie Mac’s latest Primary Mortgage Market Survey, 30-year FRMs finished the week ended January 8, 2015 at only 3.73 percent. This represented a decline of 14 basis points from the prior week’s 3.87 percent average, and a difference of 78 basis points from the year-ago figure of 4.51 percent. 15-year FRMs, which ended 2014 at 3.15 percent, s lid ten basis points to 3.05 percent; this is 51 basis points lower than last year’s 3.56 percent average.
As for adjustable-rate mortgages, 5-year ARMs slid just three basis points from 3.01 percent to 2.98 percent, but stood 17 basis points lower than the year-ago average of 3.15 percent. 1-year ARMs ticked down by just one basis point, moving from 2.40 percent as of the end of 2014 to 2.39 percent on Thursday. Likewise, this figure is 17 hundredths of a percentage point lower than last year’s 2.56 percent average.
Keeping it short and sweet, Freddie Mac vice president and chief economist Frank Nothaft concisely explained that the 10-year Treasury’s performance was the main defining factor in Thursday’s big decline. “Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months,” said Nothaft. “Meanwhile, the Fed minutes indicated ongoing discussion regarding the timing of the first rate hike.”
Most pundits expect the U.S. Federal Reserve to increase its short-term interest rates sometime in the second half of 2015, albeit on an incremental basis. Expectations also point to 30-year FRMs increasing progressively throughout the year, but peaking at 4.80 percent or 4.90 percent at the very most.
Bankrate Survey Shows Improvements in 30-Year and 15-Year Mortgage Rates
Separate from Freddie Mac, Bankrate’s first weekly mortgage rate survey for the calendar year 2015 also saw a similar trend, as 30-year fixed mortgage rates dropped 14 basis points from 3.99 percent to 3.85 percent. 15-year FRMs also declined by double digits, losing 11 basis points and dropping from 3.27 percent to 3.16 percent. 5/1 ARMs, additionally, took a big tumble, falling from 3.32 percent to 3.20 percent, a decline of 12 hundredths of a percentage point.
Some financial experts have connected this year’s big mortgage rate drops in initial weekly surveys and reports to international economic concerns. Bankrate observed something similar in its accompanying statement. “As we start 2015, concerns about the global economy still have a tight grip on markets, bringing bond yields and mortgage rates lower,” said Bankrate. “Financial markets have been jittery as investors mull the continued decline in oil prices, and what that says about the weakness of the global economy.”
It was these concerns that had, according to yet another mortgage report from Zillow, caused mortgage rate movements on its report to be extremely volatile over the past two weeks, but eventually drop at the end of the wraparound week.