Mortgage rates are falling back down this week, according to Bankrate, the 30 year fixed rate mortgage (FRM) is down a shocking 12 basis points since last week, and sits at 3.93%. Also falling this week is the 15-year fixed rate mortgage which only dropped one basis point to 3.29%. Likewise, the 5/1-yr adjustable rate mortgages had the largest drop of 18 basis point from 3.89% last week to 3.71% this week. As a result of the decreasing mortgage rates, this could be a key turning point for homeowners looking to refinance their mortgages who have not yet done so. This could result in substantial savings for homeowners who purchased their homes in 2018 when rates were a full percentage point higher. Regardless of the lower rates, there are still fewer home sales than last year and loan applications have fallen 1.1% since last week according to the Mortgage Bankers Association. Home sales could be lower due to a shortage of mid-to-lower priced homes and a lack of consumer confidence that is holding back  buyers. 

On the other hand, Freddie Mac has the mortgages rates listed lower than Bankrate with the 30 year FRM at 3.75% down six basis points since last weeks 3.81%. The 15-year FRM follows suit with a slight downward trend of five basis point from 3.23% to 3.18%. Similarly, the 5/1 year ARM decreased by one basis point since last week and now sits at 3.47%. These rates are resulting in refinance applications to rise by 2% over the previous week which is 87% higher than the same week in 2018. Even though these lower rates have yet to show an impact on home sales, there’s a clear path of purchase demand that should translate into higher home sales in the second half of the year. 

Below is a graph from Freddie Mac showing the U.S. weekly averages for 30-yr FRM, 15-yr FRM, and 5/1-yr ARM as of July 25, 2019. 



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