Mortgage rates sank this week in response to a sharp drop in consumer confidence for August, according to surveys conducted by mortgage buyer Freddie Mac and Bankrate.
In Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage averaged 5.77 percent, with an average 0.8 points, for the week ended today, down from last week when it averaged 5.82 percent.
The average for the 15-year fixed-rate mortgage this week is 5.15 percent, with an average 0.7 points, also down from last week when it averaged 5.21 percent.
One-year Treasury-indexed adjustable-rate mortgages averaged 3.97 percent this week, with an average 0.8 point, down more from last week when it averaged 4.05 percent.
“The drop in consumer confidence left an unsavory taste in the market, creating a fear that consumer spending will slow,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Because consumer spending constitutes about two-thirds of the economy, this could seriously impact economic growth. As a result, interest rates tend to retreat to lower levels.
“August employment figures are due out tomorrow and those numbers will shed more light on the future financial strength or weakness of families. And that strength or weakness is a large part of what will drive the pace of the nation’s economic growth.”
Disappointing economic data pushed fixed mortgage rates to a five-month low, according to Bankrate.com’s weekly national survey of large lenders. The average 30-year fixed-rate mortgage dived to 5.78 percent in Bankrate’s survey, the lowest since March 31. The 30-year fixed-rate mortgages this week had an average of 0.32 discount and origination points.
The 15-year fixed-rate mortgage popular for refinancing sank from 5.25 percent to 5.15 percent. The average rate for the jumbo 30-year fixed-rate mortgage fell from 6.1 percent to 6.02 percent, with the average one-year adjustable-rate mortgage retreating from 4.22 percent to 4.16 percent. Mortgage rates declined on several unsettling bits of economic data.
Second-quarter economic growth, as measured by Gross Domestic Product, was revised downward from 3 percent to 2.8 percent. Weak growth in personal income during July, up just 0.1 percent, trumped a strong rebound in consumer spending. A sharp drop in consumer confidence, mostly on concerns about the job market, reinforced the trend of disappointing economic news and declining bond yields. Mortgage rates, which are closely related to yields on long-term government bonds, fell sharply in response.
The following is a sampling of Bankrate’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.
New York – 5.83 percent with 0.08 point
Los Angeles – 5.8 percent with 0.49 point
Chicago – 5.82 percent with 0.02 point
San Francisco – 5.81 percent with 0.27 point
Philadelphia – 5.79 percent with 0.25 point
Detroit – 5.63 percent with 0.25 point
Boston – 5.9 percent with 0.05 point
Houston – 5.69 percent with 0.82 point
Dallas – 5.77 percent with 0.53 point
Washington, D.C. – 5.74 percent with 0.48 point
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