After two weeks of little change, mortgage rates improved slightly last week.
According to Freddie Mac, conforming 30-year fixed mortgage rates fell to an average of 3.84% nationwide for borrowers willing to pay 0.8 discount points at closing plus full closing costs (1 discount point is equal to 1% of the loan amount). This is the lowest Freddie Mac 30-year fixed rate ever recorded.
The 15-year fixed average mortgage rate is also at its lowest point in history. According to Freddie Mac’s survey, the 15-year fixed averaged 3.07% with 0.7 discount points last week. One year ago, the rate was 3.89%.
Much of the decline last week could be traced to the less-than-stellar job numbers released on Friday. Bad economic news tends to be mortgage rate positive.
This week, with a sparse economic calendar, mortgage markets will likely take cues from events in Europe. Notably, France has elected a new leader that prefers government spending over austerity, and voters in Greece have “punished” leaders that supported the eurozone bailout of the financially beleaguered country.
Events such as these add uncertainty to an already shaky fiscal situation in Europe and could result in a flight to the relative safety of US assets. Fear spurs investors to seek “safe” assets such as U.S. government-backed bonds and mortgage debt. As demand for mortgage bonds rises, mortgage rates tend to fall.
This week, rates are starting the week improved. Whether it’s a knee-jerk reaction to Eurozone news from the weekend, or low rates are here to stay is tough to know. Therefore, if today’s mortgage rates look good to you, consider locking it in. There’s far more room for rates to rise than fall.