Mortgage rates in the US dropped this week amid uncertainty in world financial markets.
The 15-year fixed average rate dropped to 3.20% from 3.24% the previous week, while the 30-year fixed average rate dropped to 4.04% compared to 4.08% last week – one year ago it was at 4.15%.
The five-year ARM average fell to 2.93% from 2.99% last week and the one-year ARM average dropped to 2.5% from 2.52% a week ago.
According to Freddie Mac, because of the recent plunge in Chinese stocks as well as the Greek financial collapse investors are finding it more attractive to buy U.S treasury bonds – sending mortgage rates down.
“Overseas volatility is likely to persist for some time, providing some restraint on potential U.S. rate increases,” said Sean Becketti, chief economist at Freddie Mac.
He added:
“In addition, the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously — monitoring events both overseas and in the United States to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4 percent for a while.”
Sean Becketti, Freddie Mac chief economist, said in a statement:
“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China. Mortgage rates fell as well, although not by as much as government bond yields,”
In addition, according to data from the Mortgage Bankers Association, applications for mortgages increased this week. The market composite index, a measure of the number of loan applications, climbed up 4.6 percent compared to last week.