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Mortgage Rates Have Finally Settled Down This Summer, According to Experts.

After the huge increase in mortgage rates at the start of the year, the Federal Home Loan Mortgage Corporation, also known as Freddie Mac, stated that the rates have finally settled in this Summer.

The Data

According to the data released by Freddie Mac, the mortgage rate for the 30-year fixed-rate average increased up to 4.53%, with an average of 0.4 points. It was the first increase that happened in three weeks. The previous rate was only around 4.52% a week ago, while the mortgage rates were only 4.03% a year ago. Meanwhile, the 15-year fixed-rate average also increased with an average of 0.4 points at 4.02% from 3.99% and 3.29% rate a year ago. The 5-year adjustable rate increased up to 3.86% compared to 3.28% a year ago.

The Freddie Mac noted that the mortgage rates have not yet moved since the last Quarter. However, despite the current movement, the mortgage experts are confident that it will settle down this summer.

The enterprise’s Chief Economist, Sam Khater said that the 10-year treasury yield continues to hover in a narrow range due to the impending global trade tensions in the international market. This makes most investors wary of investing in mortgages. This, in turn, had kept the borrowing cost at bay. Khater revealed how this news is a good one especially for those potential buyers looking to purchase a home during the summer season. Furthermore, many experts do not expect that this trend will change anytime soon. According to the survey conducted by Bankrate.com, most experts say the rates will remain stable for the upcoming week. The Arcus Lending CEO, Shashank Shekhar, also said he expects the rates to hold steadily for a few more months.

The Mortgage Trends

Shekhar expects that the mortgage rates will remain the same as the rates three months back despite the weekly fluctuations we experienced and adding to the fact that the average increase points are slightly lesser compared to the first three months of the year. These competing factors should help regulate the mortgage rates from rising.

Aside from that, the June Producer Price Index increased up to 3.4%, reaching its highest level since 2011. Normally, the rise of the price index would have increased the mortgage rates higher. However, the looming trade war balances the equation of the said inflation report.

The MBA President David Stevens said that the rising mortgage rates affect the refinance activity. With the North Atlantic Treaty Organization (NATO) meeting, he expects the rates not to change for the next couple of weeks.

According to the Mortgage Bankers Association, the applications for mortgages have also increased since last week. The market composite index increased up to 2.5% while the purchase index increased up to 7%. Meanwhile, the refinance index plummeted to 4%. The refinance share of mortgage activity only amounted up to 34.8%, reaching its lowest level since August 2008.

The Mortgage Credits

Stevens added that the refinance volume had dropped to its lowest level last week. This means that the economy is running steadily, along with job growth. It translates into a stronger purchasing market. However, the lack of inventory is still keeping the trend of sales at bay. The MBA recently released MCAI, or also known as Mortgage Credit Availability Index, which showed the credit availability had increased since last month. The MCAI rose with 0.2% at 181 in June. This indicates the lending standards, guidelines, and requirements are loosening.

Meanwhile, MBA’s Chief Economist, Mike Fratantoni, said that the loosening of mortgage credit was offset by the credit decline for government-state loan programs. The Government MCA recently tightened its guidelines for the past few months due to the new policies implemented by the Trump Administration. The Government also plans to reduce the Veterans Administration Interest Rate Reduction Refinance Loan program.

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