Rates for home loans declined for the third straight week, in line with the broader bond market, but not in time to help much of the housing market.
The 30-year fixed-rate mortgage averaged 4.51% in the Aug. 23 week, down two basis points, according to Freddie Mac’s weekly survey. That was the lowest point for the popular product since mid-April. The 15-year fixed-rate mortgage, meanwhile, averaged 3.98%, down from 4.01%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.82%, down five basis points.
Those rates don’t include fees associated with obtaining mortgage loans.
Mortgage rates follow the path of the U.S. 10-year Treasury note TMUBMUSD10Y, +0.00% . Government bonds have benefitted from investor fears about geopolitics and emerging markets, as well as uncertainty about signals from the Federal Reserve ahead of its Jackson Hole conference. Bond yields decline as prices rise.
Read: 10-year U.S. government bond yield slides to lowest since May
In the housing market, meanwhile, conditions are looking increasingly grim. Sales of previously-owned homes fell to the lowest pace in two and a half years in July, the National Association of Realtors said Wednesday.
The Realtor group last month cut its full-year 2018 forecast, and now sees sales 1% lower than last year. More recently, the Mortgage Bankers Association slashed its 2018 forecast for new purchase mortgages. The group sees purchases 3.5% higher compared to a year ago - but prices are running about 6% higher.
Mortgage rates are up a bit compared to last year, but it’s more likely that a combination of higher prices and rates are biting into affordability. For a $400,000 home with a 30-year fixed-rate mortgage and a 20% down payment, the monthly principal and interest payment at the 2018 average would only cost $84 more per month than the 2017 average, according to Zillow’s Mortgage Calculator.
Read: Housing is the least affordable in 10 years — here’s what’s to blame
