Rates for home loans declined as bonds caught a bid, offering some breathing room for stretched home buyers.
The 30-year fixed-rate mortgage averaged 4.83% in the Nov.1 week, down 3 basis points, mortgage finance provider Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 4.23%, down from 4.29%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.04%, a 10-basis point drop.
Bond yields tumbled late last week as investors fled to the perceived safety of fixed-income assets in the wake of a sharp stock sell-off. As prices rise, bond yields decline.
Meanwhile, momentum in the housing market has waned enough that it’s starting to worry many observers. Home prices rose at the slowest pace in nearly two years in August, according to the S&P CoreLogic Case-Shiller report released Tuesday.
Many analysts hope a more moderate pace of price increases will bring market conditions back into equilibrium, and help some frustrated buyers gain a foothold.
The bigger question now is whether the housing downturn will pull the broader economy along with it. Housing, because it’s interest-rate sensitive, turns up first in a recession and probably turns down first in a boom, but with a long lead time.
“I don’t think we’re going to be in a recession by Christmas this year. No bets for next year. But it probably does indicate that not everything is coming up perfectly roses. If we get a recession that starts sometime between now and the end of 2020 I think people will look back on it and say a-ha, back in October, the stock market was a little bit nervous and housing was going down, that’s when it began.” - David Blitzer, who manages the Case-Shiller report at S&P Dow Jones Indices
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