Mortgage rates fall to levels of past several weeks

A week after soaring to their highest levels in months, mortgage rates retreated to where they had been hovering for the past several weeks.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.95 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.99 percent a week ago and 4.20 percent a year ago.

The 15-year fixed-rate average tumbled to 3.38 percent with an average 0.5 point. It was 3.44 percent a week ago, the same as it was a year ago.

“Treasury yields fell from a week ago, helping to drive mortgage rates down to start the year,” Len Kiefer, deputy chief economist at Freddie Mac, said in a statement. “Despite increases in short-term interest rates, longterm interest rates remain subdued. The 30-year mortgage rate is down a quarter of a percentage point from where it was a year ago, and the spread between the 30-year fixed and 5/1 adjustable rate mortgage is the lowest since 2009.”

Kiefer added, “With the (Federal Open Market Committee) minutes showing continued support for gradual increases in policy rates from many participants and inflation rates remaining low, there isn’t much upward pressure on long-term rates at the moment. Whether that changes due to a tighter labor market and the economic impact of tax reform remains to be seen.”

Investors are awaiting Friday’s employment report. When the jobs report is strong, mortgage rates tend to rise.

Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed evenly split on where rates are headed. Half said they will

rise, and the other half said they will remain relatively stable in the coming week.

Michael Becker, a branch manager at Sierra Pacific Mortgage, expects home loan rates to rise this year. But in the near term, he predicts they will remain unchanged.

“All eyes will be on Friday’s job report,” he said. “The important item will be the increase in wages. If they increase more than expected, then we could see a spike in interest rates. I think wage increases will continue their trend of disappointing and that mortgage rates will hold steady in the coming week.”

Meanwhile, mortgage applications fell, according to the latest data from the Mortgage Bankers Association.

The market composite index — a measure of total loan application volume — decreased 2.8 percent from two weeks earlier. The refinance index dropped 7 percent, while the purchase index ticked up 1 percent.