Mortgage rate sinks to 3.55%, spurs refinances

The 30-year FRM hits another three-year low

Mortgage rate sinks to 3.55%, spurs refinances

Mortgage rates dipped lower for the week ending Aug. 22, with the 30-year fixed-rate mortgage (FRM) plunging to its lowest level since November 2016.

The results of the Freddie Mac Primary Mortgage Market Survey showed that the 30-year FRM dove to 3.55% with an average 0.5 point. The rate went down from 3.60% the previous week.

The 15-year FRM also dropped from the prior week’s 3.07% average to 3.03% with an average 0.5 point. Last year, the 15-year FRM was 3.98%.

Lastly, the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) fell to 3.32% with an average 0.3 point, down from 3.35% the week before and 3.82% a year ago.

“The drop in mortgage rates continues to stimulate the real estate market and the economy,” said Sam Khater, chief economist of Freddie Mac. “Home purchase demand is up 5% from a year ago and has noticeably strengthened since the early summer months, while refinances surged to their highest share in three and a half years.”

With refis on the upswing, households that refinanced in Q2 2019 can save an average $1,700 per year or $140 every month, according to Khater.

“The benefit of lower mortgage rates is not only shoring up home sales but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity,” Khater said.