Average mortgage rates slip again, helping housing: Freddie Mac

Mortgage rates continued to drop this week with the positive effects already aiding housing, according to Freddie Mac.

"The response to the recent decline in mortgage rates is already being felt in the housing market," said Freddie Mac Chief Economist Sam Khater in a press release.

"After declining for six consecutive months, existing-home sales finally rose in October and November and are essentially at the same level as during the summer months. This modest rebound in sales indicates that homebuyers are very sensitive to mortgage rate changes — and given the further drop in rates we've seen this month, we expect to see a modest rebound in home sales as well."

The 30-year fixed-rate mortgage averaged 4.62% for the week ending Dec. 20, down from last week when it averaged 4.63%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.94%.

Rates are down 32 basis points since reaching a seven-year high in November.

The 15-year fixed-rate mortgage this week averaged 4.07%, unchanged from last week. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.38%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.98% with an average 0.3 point, down from last week when it averaged 4.04%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.39%.

"Mortgage rates dropped sharply in recent days to their lowest levels since August, a sign of growing uncertainty about the Federal Reserve's moves in 2019, as markets are usually quiet leading into meetings of the Federal Open Market Committee. Big losses in stock markets and softened inflation expectations due to rapidly falling oil prices combined to push rates lower," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on Dec. 19.

A minute before the FOMC decision was released, the 10-year Treasury yield spiked at 2.855%. Within an hour it was down 10 basis points. The yield was at 2.765% midmorning on Dec. 20.

"Recent volatility in global financial markets hasn't yet spilled over into the real economy: Unemployment remains at historically low levels, growth is still robust, and many consumers are still riding the sugar high of tax cuts," Terrazas said. "Today's announcement by the Federal Reserve — raising interest rates but tempering expectations for future decisions — suggests that monetary policymakers are willing to look past this short-term volatility and will instead focus on longer-term economic growth when considering the appropriate path of interest rates."

The coming week is traditionally very quiet through the New Year's, but "volatility can be magnified by low trading volumes. We don't expect meaningful rate movement over the holidays, but the outlook for 2019 suggests, if nothing else, an increasingly uncertain path," he said.