Mortgage rates rose seven basis points compared with the prior week, but remained below 3.6% over four consecutive weeks for the first time since the fourth quarter of 2016, according to Freddie Mac.
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Foreign trade headlines were the catalyst behind this week’s increase.
“Even in a busy week for economic data, it was once again trade discussions between the U.S. and China that dictated rates’ movements. Optimism that recent signs of progress will result in the abandonment of proposed tariffs, due to be imposed Oct. 1, pushed bond yields higher, and mortgage rates followed in tow,” Matthew Speakman, an economist for Zillow, said when that company released its own rate tracker.
“A heavy dose of generally strong economic data also contributed to a rebound in mortgage rates, particularly better-than-expected wage growth figures and an encouraging read on the services sector,” Speakman said.
However, the lower rates are finally moving the needle on the home purchase market.
“Pipeline purchase demand continues to improve heading into the late fall with purchase mortgage applications up nine percent from a year ago.” Sam Khater, Freddie Mac’s chief economist, said in a press release. “The improved demand reflects the still healthy underlying consumer economic fundamentals such as a low unemployment rate, solid wage growth and low mortgage rates.
“While there has been a material weakness in manufacturing and consistent trade uncertainty, so far, the American consumer has proved to be resilient with solid home purchase demand,” he said.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.36% with an average 0.3 point, up from last week when it averaged 3.3%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.93%.
“The strength of the consumer continues to propel the economy, so all eyes will be on the August retail sales report on Friday,” Speakman said. “A positive reading would inject the economy with even more optimism, and push rates even higher, ahead of next week’s Fed meeting.”