Mortgage rates rose for the first time in six weeks, going back the above the 3% mark, as spreads to the 10-year Treasury yield widened again, according to Freddie Mac.
The 30-year fixed-rate mortgage averaged 3.01% for the week ending July 23,
"While housing demand continues to rebound, the month-long swoon in economic activity has caused the 10-year Treasury benchmark to drop," Sam Khater, Freddie Mac's chief economist, said in a press release. "In the short term, this means the demand will continue on the back of near record low mortgage rates."
Between July 16 and July 22, the 10-year yield fell to 0.597% from 0.619%. That means that spreads widened by 5 basis points during the period.
The movements in the 10-year Treasury may be related to increased economic uncertainty.
"However, the most recent consumer spending data has been pointing to slow growth since mid-June," Khater said. "The concern is that the pause in economic activity will cause unemployment to remain elevated which will lead to longer-term labor market distress."
The 15-year fixed-rate mortgage averaged 2.54%, up from last week when it averaged 2.48%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.18%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.09% with an average 0.3 point, up slightly from last week when it averaged 3.06%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.47%.
Zillow Economist Matthew Speakman agreed with Khater's assessment of why rates remain near record low levels.
"Investors continue to hold pat, waiting for clearer signs of damage to the economy as a result of the recent surge in cases, or evidence of society's resilience and ability to maintain some form of normalcy," Speakman said when Zillow released a statement on its rate tracker on July 22.
"Positive news on the latter will most likely jolt rates from this recent slumber and send them back upward. However, absent any significant developments, these low rates will remain. Whether rates remain steady or finally begin a long climb back will depend almost entirely on the battle against COVID-19."
