In the Primary Mortgage Market Survey®, Federal Home Loan Mortgage Corp (OTCBB:FMCC) stated that global market volatility resulted in a decline in average fixed mortgage rates. The average FRM declined to the lowest levels since May 2015 amid high global volatility surrounding China.
The facts
Federal Home reported that thirty year fixed-rate mortgage averaged 3.84%, lower from last week number when it average 3.93%. A year earlier during same period, the figure stood at 4.1%. There was also a fall in 5-year “Treasury-indexed hybrid” ARM as it averaged at 2.90% compared to 2.97% in the same period, a year earlier. 1-year treasury-indexed ARM was 2.62%, unchanged from last week.
Sean Becketti of Federal Home stated events in China to be responsible for lower mortgage rates. The ongoing events in China have resulted in intense volatility all over in global equity markets in last couple of weeks. Due to this, interest rates have rocked up and down, but still to a lesser degree as compared to equities.
The highlights
Becketti further added that during this period investors swapped between flights to bargain hunting and quality buying among plunged stocks. Amidst all this chaos, the thirty year mortgage rate declined to 3.84%, the lowest level since May and also recording the fifth week in a row with a rate below 4%.
Considering the increase in global volatility, the mortgage rates may witness more volatile moves and there are hints that the unsettled global environment will force the Fed consider twice before making any decision on interest rates in September 2015. If it is the case, the long-term mortgage rates may remain under pressure in coming period, providing increased support in the housing sector. The last report on new home sales stated that the sales surged 26% YOY.
In last trading session, the stock price of Federal Home Loan Mortgage Corp (OTCBB:FMCC) registered a strong session and gained over 4% to close at $2.18.
