Average mortgage rates keep sliding and consumers respond

Average mortgage rates continued the downward spiral that started before Thanksgiving and in the past week that finally boosted mortgage application activity, according to Freddie Mac.

Since reaching a seven-year high at 4.94% in mid-November, the average for the 30-year fixed-rate mortgage is now down nearly half a percentage point.

"Mortgage rates fell to the lowest level in nine months, and in response, mortgage applications jumped more than 20%. Lower mortgage rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales," Sam Khater, Freddie Mac's chief economist, said in a press release.

The 30-year FRM averaged 4.45% for the week ending Jan. 10, down from last week when it averaged 4.51%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.99%.

The 15-year fixed-rate mortgage this week averaged 3.89%, down from last week when it averaged 3.99%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.44%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.83% with an average 0.3 point, down from last week when it averaged 3.98%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.46%.

However, Zillow's rate tracker released on Jan. 9 reported that mortgage rates increased for the first time since early November, "propelled upward by stellar jobs data, more cautious forward-looking statements from Fed officials, and easing trade fears," Aaron Terrazas, Zillow's senior economist, said in a press release.

"Lower rates in December will provide an important test of exactly how much higher interest rates weighed on the housing market in late 2018. Friday's blockbuster jobs report eased fears, at least for the moment, of an impending economic slowdown, but comments from Fed officials and the minutes from December's Federal Reserve meeting revealed that some monetary policymakers are concerned about slowing global growth — sentiment that could imply a slower pace of interest rate hikes over the next year. Key economic data releases are on hold while the federal government remains shut down, clouding markets' read on the state of the economy at a critical moment when there is growing uncertainty about underlying economic fundamentals," Terrazas said.