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Mortgage rates fall for fifth week in a row

February 4, 2016 at 10:00 a.m. EST
(Andrew Harrer/Bloomberg)

Bad news for investors has been good news for home buyers and owners as mortgage rates dropped for the fifth week in a row.

Stock indices continued to lose ground this week, and the 10-year Treasury yield sank to near a one-year low. Since the movement of the bond is one of the best indicators whether mortgage rates will rise or fall, the decline in the 10-year Treasury yield foreshadowed lower home loan rates.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average tumbled to 3.72 percent with an average 0.6 point, falling to its lowest level since April. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.79 percent a week ago and 3.59 percent a year ago.

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The 15-year fixed-rate average slid to 3.01 percent with an average 0.5 point. It was 3.07 percent a week ago and 2.92 percent a year ago.

The five-year hybrid adjustable rate mortgage average dipped to 2.85 percent with an average 0.4 point. It was 2.9 percent a week ago and 2.82 percent a year ago.

“Both the Treasury yield and the mortgage rate now are in the neighborhood of early-2015 lows.  These declines are not what the market anticipated when the Fed raised the Federal funds rate in December. For now, though, sub-4-percent mortgage rates are providing a longer-than-expected opportunity for mortgage borrowers to refinance.”

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Meanwhile, mortgage applications were down slightly, according to the latest data from the Mortgage Bankers Association. The powerful snowstorm that blasted the East Coast likely dampened demand.

The market composite index — a measure of total loan application volume — slipped 2.6 percent from the previous week. The refinance index ticked up 0.3 percent, while the purchase index fell 7 percent.

The refinance share of mortgage activity accounted for 59.2 percent of all applications.