August 5th, 2016 5:27 AM by Jackie A. Graves, President
Mortgage rates fell this week
for the first time in a month, averaging 3.43 percent for a 30-year, fixed-rate
loan, down from 3.48 percent. A year ago, rates averaged 3.91 percent,
according to Freddie Mac’s weekly survey.
Rates had been going up for
most of July, but this week’s dramatic drop erased most of that increase.
That’s good for both homebuyers and sellers.
Source: Freddie Mac
Rates have held below 4 percent
for 31 weeks, the second-longest run of cheap borrowing the U.S. has ever had.
The record was set from March 2012 to June 2013, when the cost of a 30-year
loan held below 4 percent for 65 weeks, hitting a historic low of 3.31 percent
in November 2012.
Homeowners are refinancing in
droves and new programs made it a little easier for lower-credit borrowers to refinance last month, according to
the Mortgage Bankers Association. Refinancing activity is up 55 percent from
this time last year.
Rates fell this week after new
data showed the U.S. economy growing at a much slower pace than analysts
thought. Consumers are taking advantage of cheap borrowing to buy things like
cars and houses. But businesses aren’t spending, which is holding the economy
“If you can’t borrow money at these rates and
find something useful to invest in, what does that say about the prospects for
the global economy?” Scott Brown, chief economist at Raymond
James & Associates, wrote in a note to clients. “Hopefully, this is
Borrowing will remain cheap for
now and home price growth is slowing. Nationally, housing still
hasn’t fully recovered from the credit bubble but the National Association of
Homebuilders found 97 percent of the market
at or above “normal” levels in the second quarter of this year.
“With a strengthening economy,
solid job growth and low mortgage interest rates, the market should continue on
an upward trajectory throughout the rest of the year,” NAHB Chairman Ed Brady
Mortgage rates fluctuate
constantly, but expect them to stay comfortably low for a while.