Thirty- and 15-year fixed loans fell sharply today, by 8 and 12 basis points, respectively, while 5/1 ARMs also dipped by 8 basis points, according to a NerdWallet survey of mortgage rates published by national lenders on Wednesday morning.
The drop in mortgage rates is a reaction to the falling 10-year U.S. Treasury yield, which has declined following the Federal Reserve’s increase to short-term interest rates last week. Although we’d normally see interest rates rise following a Fed increase, investors are growing skittish about the pace of economic growth amid uncertainty over how quickly the Trump administration can move forward with its proposed fiscal policies.
Mortgage applications drop for purchase, refinance loans
Mortgage applications fell 2.7% from the previous week as mortgage rates continued to fluctuate, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending March 17.
Purchase applications slipped 2% week over week, and refinance applications fell 3% during the same period. The most substantial decline in refinance activity came in government-backed loans, which dropped by 12% to the lowest level since December 2014, the survey found.
» MORE: How much home can you afford?
Meanwhile, refinances fell to 45.1% of total loan application activity, down from 45.6% the previous week, but adjustable-rate-mortgage activity rose to 9% of overall mortgage applications. The share of ARM applications hasn’t been that high since October 2014, the MBA reported.
Typically, when mortgage rates increase — and mortgage rates have been on an overall upward trend since the 2016 presidential election — more borrowers tend to consider ARMs because the initial interest rate is much lower than it is for a 30-year fixed loan, making the mortgage more affordable in the early years of homeownership.
Homeowners looking to lower their mortgage rate can shop for refinance lenders here.
NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.
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The article Mortgage Rates Wednesday, March 22: Sharp Drop; Mortgage Applications Slide originally appeared on NerdWallet.
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