Mortgage rates inched up for the week ending July 12, marking the first time since June that the cost to borrow for a home increased. According to Freddie Mac, the interest rate on a 30-year fixed-rate mortgage was 4.53%, up 0.01% from a week ago and up 0.50% from a year ago. The mortgage rate on a 15-year fixed-rate loan was 4.02%, up 0.03% on the week and up 0.73% from last year. The mortgage rate on a 5/1-year adjustable-rate mortgage was 3.86%, up 0.12% from last week and up 0.58% from a year ago.
"The 10-year Treasury yield continues to hover along the same narrow range, as increased global trade tensions are causing investors to take a cautious approach. This, in turn, has kept borrowing costs at bay, which is certainly welcoming news for those looking to buy a home before the summer ends," wrote Freddie Mac in a release announcing mortgage rates for the week ending July 12.
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"A record number of people quit their job last month, most likely for a new opportunity with higher wages and better benefits," reported Freddie Mac. "This positive trend, along with these lower mortgage rates, should increasingly give some previously priced-out prospective homebuyers the financial wherewithal to resume their home search." For June, the Labor Department disclosed that the economy added 213,000 jobs, despite trade tensions and worker shortages. The unemployment rate stands at 4%, up from an 18-year low of 3.8% in May.
For all of June, mortgage rates were either declining or staying steady. This was welcome news for the real estate market, which had feared that the rising cost for home loans would have a big impact on home sales. What may be hurting the market more than mortgage rates is a dearth of affordable properties as home values continue to increase. In red-hot areas of the real estate market, bidding wars are ensuing. Some first-time home buyers who are very price sensitive are getting shut out of the market as a result.
With mortgage rates declining for June and into the first week of July, mortgage applications did start to pick back up again. According to the Mortgage Bankers Association (MBA), for the week ending July 6, mortgage applications increased 2.5% compared with a week earlier. On an unadjusted basis, the index fell 18% compared with the previous week. The Refinance Index decreased 4% from the previous week and is now at its lowest level since December 2000. The seasonally adjusted Purchase Index increased 7% from the week earlier, while on an unadjusted basis, it was down 15% from the previous week. Both refinance and adjustable-rate mortgage application activity declined, with the refinance share of mortgage activity hitting its lowest level since August 2008. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications, the MBA said.