helped drive down mortgage rates to their lowest levels in 16 months.
According to a new report from Zillow
, the interest rate for a 30-year, fixed-rate mortgage continued its decline last week, falling further below 4%. Current rate borrowers were quoted an average interest rate of 3.81% on Zillow’s Mortgage Marketplace in the week that ended Tuesday, down from 3.96% in the previous week.
“Rates dropped to the lowest level since June 2013 on news that the Federal Reserve has more reservations about the health of the U.S. and global economy than expected, which in turn, may delay rate hikes,” said Erin Lantz, vice president of mortgages at Zillow.
Investors are seeking a safer place to park their money and are doing so in bonds and mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.
The stock market has experienced an unusually bumpy road these last few weeks. The leading market indexes are down at least 5.5% from their September highs. The technology-heavy Nasdaq Composite index has lost nearly 8% in less than a month, according to The New York Times
Low interest rates have also affected the volume of mortgage applications. According to the latest data from the Mortgage Bankers Association, applications increased 5.6% last week from the previous week.
“Growing concerns about weak economic growth in Europe caused a flight to quality into U.S. assets last week, leading to sharp drops in interest rates. Mortgage rates for most loan products fell to their lowest level since June 2013,” said Mike Fratantoni, chief economist at MBA. “Refinance application volume reached the highest level since June 2014 as a result, with conventional refinance volume at its highest since February 2014.”
The refinance share of mortgage activity increased to 59% of total applications, the highest level since February 2014, from 56% the previous week. The adjustable-rate mortgage share of activity increased to 8% of total applications.
Stock market selloffs, fears that Europe’s faltering economy will create drag for the rest of the world and perhaps even