The FOMC cut short-term rates by 25 basis points on July 31, a move that powered the 15 basis point decline in Freddie Mac’s report on interest rates for fixed mortgages.
The 30-year fixed rate was down to 3.60% as of August 8, 15 basis points below the 3.7% in the prior wee, and 17 basis points below the 3.77% for July. The rate is the lowest since 3.57% in the November 10, 2016 data, and since 3.47% in October 2016 for monthly averages.
The 15-year fixed rate was down to 3.05% after 3.20% in the prior week and was the lowest weekly number since 2.88% in the November 10, 2016 week. The rate was down from the 3.20% average for June and was the lowest since 3.03% in November 2016.
The rate for a 5/1-year ARM was down 10 basis points to 3.36% on August 8 from a week earlier, and down 11 basis points from the July average of 3.47%. It was the lowest rate since 3.36% in the weekly data since 3.36% on December 14, 2017, and the lowest monthly rate since 3.24% in November 2017.
The sharp decline reflects the drop in Treasury yields both from lower short-term rates set by the FOMC and from perceived higher risks to the US economy in a trade and/or currency war. However, the decline could inspire those current mortgage holders who have not yet refinanced to do so, and may get some reluctant potential homebuyers to commit to a purchase while rates are at lows not seen in nearly three years and home affordability is improved.
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