As quick as they shot up, mortgage rates have fallen back down.
The average rate on a 30-year fixed mortgage fell to a hair above 4 percent this week, according to Freddie Mac data first reported by the Wall Street Journal.
The number is the lowest since January 2018, just before the average began to steadily rise to a November peak to just below 5 percent.
High mortgage rates in the fall pushed mortgage applications to a four-year low, slowed U.S. home buying, and put home builders at their least confident in two years.
But rates have dropped sharply over the last several months as the Federal Reserve halted hikes on 10-year Treasury bonds that drove last year’s mortgage rate growth.
That’s been good news for those home builders. Shares for the S&P Homebuilders exchange-traded fund, which includes building products and home-furnishing companies, has shot up 17 percent in the first quarter. The halt in hikes also boosted real estate investment trust performance.
The 30-year-rate mortgage rate dropped about a quarter point in the last week alone and some lenders are advertising sub-4 percent mortgages, including Toronto-Dominion Bank and HSBC, according to the Journal. Those rates are enticing would-be borrowers who may have sat out the rate increases.
“People love it when they have a rate like that,” Sanborn Mortgage Corp. president Michael Menatian told the Journal. “Psychologically, it has a huge impact.”
Commercial real estate investors could also benefit if the Fed keeps interest rate hikes to a minimum this year. [WSJ] — Dennis Lynch