Rates tumble as stocks rattle some investors

WASHINGTON — Mortgage rates experienced the biggest one-week drop in nearly four years after stock market volatility rattled investors.

According to data released Thursday by Freddie Mac, the 30-year fixed-rate average sank to 4.81 percent with an average 0.4 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.94 percent a week ago and 3.92 percent a year ago. The 30-year fixed rate has fallen to its lowest level in seven weeks.

The 15-year fixed-rate average dropped to 4.24 percent with an average 0.5 point. It was 4.36 percent a week ago and 3.32 percent a year ago. The five-year adjustable rate average fell to 4.09 percent with an average 0.3 point. It was 4.14 percent a week ago and 3.22 percent a year ago.

When the stock market is fitful, investors are inclined to park their money where it is safe, such as in long-term bonds. As demand pushes up bond prices, yields fall, and the yield on the 10-year Treasury has been in a persistent decline. It has receded for six straight days before plateauing at 3.06 percent on Tuesday. Because mortgage rates tend to follow the same path as bond yields, they also tumbled.

“The global rout of stocks has yet to subside — with stocks now down for the year — which caused mortgage rates to slide and approach the bottom of their recent trading range, as investors sought safer assets,” said Aaron Terrazas, senior economist at Zillow. “For now, however, rates remain near their highest levels since 2011 and a December rate increase (by the Federal Reserve) is all but inevitable.”