The present volatility in global markets has been affecting mortgage rates positively. According to The Washington Post, the slowdown in China's economy as well as the declining oil prices have caused unpredictability in many markets, which made investors feel that it is rather safer to invest in government bonds. In effect, the demand in these bonds have lowered the yield. And this week, the return on benchmark 10-year Treasury note has dropped below 2 percent.
As previously reported, changes in the 10-year Treasury bond is said to be one of the best indicators of movement of mortgage rates. In simple terms when the yields on these bonds go down, rates also fall down.
Freddie Mac, last week, has released a new report that shows that the 30-year fixed-rate average sank lower, again for the third time, to 3.81 percent with an average 0.6 point. A week ago, it was at 3.92 percent. Moreover, the 15-year fixed-rate average sank to 3.1 percent with an average 0.5 point from 3.19 percent a week ago. Last week, the five-year adjustable rate average also feel to 2.91 percent with an average 0.5 point from 3.01 percent a week ago.
According to The Washington Post, Freddie Mac chief economist Sean Becketti said in a statement, "The Freddie Mac mortgage rate survey had difficulty keeping up with market events this week."
"The 30-year mortgage rate dropped 11 basis points to 3.81 percent, the lowest rate in three months. This drop reflected weak inflation - 0.7 percent CPI inflation for all of 2015 - and nonstop financial market turbulence that is driving investors to the safe haven of Treasuries. However, the survey was largely complete prior to Wednesday's Treasury rally that drove the yield on the 10-year Treasury below 2 percent, down 29 basis points since the end of 2015."
Therefore, changes with the 10-year Treasury bond are more likely to influence mortgage than the rate increase by the Federal Reserve.
