US mortgage rates are climbing this week; 30-year loan at 3.65%
WASHINGTON (AP) – Long-term mortgage rates in the United States soared this week in a see-saw market amid growing anxiety over the devastation of the economy from the coronavirus pandemic.
Two weeks ago, mortgage rates hit historic lows. Mortgage buyer Freddie Mac reported Thursday that the average 30-year benchmark loan rate jumped to 3.65% this week, from 3.36% last week.
Freddie Mac said the short-term hike was due to rising prices from mortgage lenders to meet growing demand for refinancing into loans at historically low rates.
The average rate on the 15-year fixed-rate mortgage fell from 2.77% to 3.06%.
The recent downward trend in mortgage rates was sparked by investors shifting money out of the stock market to the safety of U.S. Treasuries as the crisis of confidence surrounding the global viral epidemic s ‘is aggravated. Long-term mortgage rates tend to follow the yields on 10-year Treasuries, so they usually fall in tandem.
Financial markets have shuddered amid a cascade of cancellations and closings around the world due to the COVID-19 virus. Large swathes of the U.S. economy have moved closer to shutdown as authorities ask Americans to stay home to slow the spread of the virus.
After weeks of staggering losses, US stock prices swung between gains and losses on Wall Street on Thursday. Investors are weighing the growing likelihood of a recession against massive emergency efforts by Trump’s White House, Congress, and other authorities around the world to prop up economies.
The Dow Jones Industrial Average was up about 300 points around noon, while the larger Standard & Poor’s 500 index was up about 30 points, or more than 1%.
Record mortgage rates have been a boon to potential buyers, and they give many homeowners the option of refinancing themselves into lower rate loans to free up money to spend or save.
But potential buyers may be reluctant to buy homes amid the coronavirus outbreak, seeking to avoid social contact, experts note. This could slow home sales. And ultra-low mortgage rates are unlikely to produce a significant increase in home sales this year, as the supply of homes for sale remains at historically low levels.
Each week, Freddie Mac surveys lenders to compile his national mortgage rate figures. The average does not include additional fees, called points, that most borrowers have to pay to get the lowest rates.
The average rate on a five-year variable rate mortgage jumped this week to 3.11% from 3.01% last week.