Mortgage rates fell for the first time in four weeks, averaging 3.60 percent, down from 3.66 percent. That’s a big drop. A year ago at this time, the average 30-year, fixed-rate home loan was 4.04 percent, according to Freddie Mac.
Rates on home loans have been below 4 percent all year and have averaged less than 3.7 percent for the past 10 weeks, a boon to both buyers and sellers.
Borrowing got cheaper for homeowners after last week’s employment report, which showed the economy created only 38,000 jobs in May, a big disappointment.
“Growing optimism about the state of the economy was quickly erased with May’s employment report,” Freddie chief economist Sean Becketti said. “The disappointing release caused an immediate flight to quality resulting in the 10-year Treasury yield dropping 10 basis points on Friday. The 30-year fixed-rate mortgage responded by falling 6 basis points to 3.60 percent.”
Federal Reserve Chair Janet Yellen signaled on Friday that her team, out of an abundance of caution, isn’t likely to raise their benchmark rate when Fed policymakers meet next week. In a speech, she sounded an upbeat note on housing.
“Both home sales and construction have been gradually improving,” Yellen said. “Housing has been supported by low mortgage rates, and while mortgage credit is still difficult to obtain for households with low credit scores or hard-to-document income, those with good credit histories are generally able to borrow at very favorable terms.”
Policymakers and markets are skittish about the economy’s uneven growth and many people are worried about potential shocks to the system coming down the pike. But for now, the U.S. housing market is reaping the benefits of that unease — cheap rates.