Mortgage rates remained flat this week, a sign that the bottom has possibly been reached, but the housing market looks to remain strong for the near future, according to Freddie Mac.
"The year-long slide in mortgage rates seems to be ending as rates have flattened over the last month and the economic rebound has slowed," Sam Khater, Freddie Mac's chief economist, said in a press release.
"But with near-record-low rates, buyer demand remains robust with strong first-time buyers coming into the market. The demand is particularly strong in more affordable regions of the country such as the Midwest, where home prices are accelerating at the highest rates over the last two decades."
Those rates held firm "despite notable changes in the bond market that typically would drive rate changes," Matthew Speakman, an economist with Zillow, said in a statement following the weekly release of its rate tracker on Wednesday. "In a volatile stretch due to the fate of the next round of fiscal relief, among other factors, Treasury yields trended upward in recent days to reach their highest levels in more than three months.
"Normally a move like this would be accompanied by an uptick in mortgage rates, but so far, rates have barely budged. In fact, rates fell slightly in the last two days and remain close to all-time low levels," Speakman said.
The 30-year fixed-rate mortgage averaged 2.87% for the week ending Oct. 8, according to Freddie Mac, slightly
But the 15-year FRM averaged 2.37%, slightly up from last week when it averaged 2.36%. A year ago at this time, it averaged 3.05%.
As for the five-year Treasury-indexed hybrid adjustable-rate mortgage, it averaged 2.89% with an average 0.2 point, slightly down from last week when it averaged 2.9%. A year ago at this time, it averaged 3.35%.
The normal relationship between mortgage rates and Treasury yields has been frayed because of the pandemic, Speakman said. As a result, "mortgage rates remain much higher than you would expect them to be — given the level of Treasury yields.
"While the upward move in Treasurys does increase the likelihood of mortgage rates eventually moving higher, it appears that rates do have a bit of a buffer before they head in that direction, and generally it means that it will take a larger increase in Treasurys before we see mortgage rates head higher," said Speakman.
