Average mortgage rates fall by the most in three years

Falling oil prices and continued volatility in the stock market resulted in the largest week-to-week decline in mortgage rates in over three years, according to Freddie Mac.

For the week ending Nov. 21, the 30-year fixed-rate mortgage fell to 4.81%, a 13-basis-point decline from the prior week. This week's survey was released a day early because of Thanksgiving. At this time last year, the 30-year FRM averaged 3.92%.

"The downward spiral in oil prices and a volatile equities market caused mortgage rates to decline 13 basis points, the largest weekly drop since January 2015," said Freddie Mac Chief Economist Sam Khater in a press release. "Mortgage rates are the lowest since early October and the dip offers a window of opportunity for would-be buyers that have been on the fence waiting for a drop in mortgage rates."

The 10-year Treasury yield, which is a benchmark for pricing 30-year mortgages, fell from 3.13% on the afternoon of Nov. 14 to 3.04% during the morning of Nov. 20, before rebounding to 3.08% the following morning.

International trade tensions were also a contributing factor to the drop in rates, Aaron Terrazas, senior economist at Zillow, said when that company released its own rate tracker on Nov. 20.

"Despite a slew of strong economic releases over the past few months, especially in the labor market, investors appear to be growing increasingly wary of the global economy's ability to maintain recent growth and are resetting their expectations accordingly," Terrazas said. "For now, however, rates remain near their highest levels since 2011 and a December rate increase is all but inevitable."

Black Friday is the next big event that could influence rate movements.

"Markets are likely to be quiet for the remainder of the week, but could react early next week to initial reports of retail spending at the start of the holiday shopping season. Strong store traffic and receipts would show that American consumers are still feeling secure despite stock market turmoil and could push rates back on their upward trajectory," he said.

The 15-year fixed-rate mortgage averaged 4.24%, down 12 basis points from last week's average of 4.36%, Freddie Mac said. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.92%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.09%, a decline of 5 basis points, with an average 0.3 point, unchanged from last week. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.22%.