Economic Report: Mortgage rates drop in opening week of 2018

Mortgage rates declined in the first week of 2018, even as most analysts believe they’ll move higher in coming months.

The 30-year fixed-rate mortgage averaged 3.95% in the week ending January 4, Freddie Mac said Thursday. That was down from 3.99% in the prior week. The 15-year fixed-rate mortgage averaged 3.38%, down six basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.45%, down from 3.47%.

Mortgage rates track the yield of the 10-year U.S. Treasury note TMUBMUSD10Y, +1.15%  , which had stumbled in the final week of 2017 after the Republican tax plan was signed into law.

Most analysts expect the tax bill, and an improving economy, to stoke faster inflation, making bonds less attractive — and nudging rates higher. Bond yields rise as prices fall.

Also read: Has the housing market recovered? Ask the 1.4 million homeowners still underwater

“With the FOMC minutes showing continued support for gradual increases in policy rates from many participants and inflation rates remaining low, there isn’t much upward pressure on long-term rates at the moment,” Freddie’s deputy chief economist, Len Kiefer, noted in a release.

The difference between the 30-year fixed- and 5/1 adjustable- rate mortgages is the lowest since 2009, Kiefer added.

Also read: Why it’s so hard to forecast home prices for 2018 — and why that should worry you

No Comments

Post A Comment