Mortgage rates fall back below 3 percent

Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.

The survey is based on home purchase mortgages, which means rates for refinances may be higher. The price adjustment for refinance transactions that went into effect in December is adding to the cost. The adjustment, which applies to all Fannie Mae and Freddie Mac refinances, is 0.5 percent of the loan amount. That works out to $1,500 on a $300,000 loan.

The 15-year fixed-rate average fell to 2.29 percent with an average 0.6 point. It was 2.35 percent a week ago and 2.86 percent a year ago. The five-year adjustable rate average edged up to 2.83 percent with an average 0.3 point. It was 2.8 percent a week ago and 3.28 percent a year ago.

“The Freddie Mac interest rate for a 30-year loan slid again this week,” said Danielle Hale, chief economist at Realtor.com. “Long-term bond rates, which shifted from a gradual climb to an accelerated one in early 2021, have done an about-face since mid-March due to the [Federal Reserve’s] patient approach to monetary policy. This has given investors confidence that the Fed won’t push rates up too quickly.”

The yield on the 10-year Treasury fell to its lowest level in more than a month this week, dropping to 1.57 percent on Wednesday.

“After a sustained sell-off in 2021’s first quarter, demand for Treasurys has increased recently, keeping downward pressure on yields and thus mortgage rates,” said Matthew Speakman, a Zillow economist. “Continuing a recent trend, yields showed little regard for strong economic data reports released last week.”

Even though mortgage rates have fallen the past three weeks, Speakman doesn’t expect the slide to last.

“Despite another weekly downtick, the longer-term trend for mortgage rates remains to the upside and barring a significant economic or pandemic-related setback, it’s unlikely that this downward movement in rates will continue for an extended period,” he said.

Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed evenly divided on where rates will head in the coming week. Half said they will go down, the rest said they will remain about the same.

Ken H. Johnson, a real estate economist at Florida Atlantic University, is one who predicts rates will decrease somewhat.

“Ten-year Treasury yields have been moving slightly lower over the past week,” Johnson said. “Seeing no imminent threat to the financial markets, 30-year mortgage rates should move slightly down as well. Moderating 10-year Treasury yields are really helping keep a lid on long-term mortgage rates right now.”

Mortgage delinquencies declined last month as many borrowers used their stimulus checks to catch up on overdue payments. According to data from Black Knight, a mortgage and real estate technology and data provider, the national mortgage delinquency rate fell to 5.02 percent last month from 6 percent in February, a 16.4 percent drop. Such big drops often happen in March because borrowers use their tax refunds on missed mortgage payments. Even so, last month’s decline was higher than the usual 10 percent decline in March.

Despite the big drop in delinquencies, 1.9 million mortgage-holders remain at least 90 days past due on payments. That’s 1.5 million more than a year ago and five times pre-pandemic levels.

Meanwhile, mortgage applications picked up again after a weeks-long slump. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 8.6 percent from a week earlier. The purchase index climbed 6 percent from the previous week, and the refinance index jumped 10 percent. The refinance share of mortgage activity accounted for 60 percent of applications.

“Mortgage rates dropped to their lowest level [in MBA’s survey] in nearly two months last week, leading to an increase in total mortgage applications for the first time since late February,” said Bob Broeksmit, MBA president and CEO. “Applications to buy a home jumped considerably on a weekly and annual basis, and after six weeks of declines, lower rates led to a resurgence in refinances.”