Mortgage rates unchanged even as Treasury yields dropped

Mortgage rates remained unchanged this past week even with all of the upheaval in the bond markets that pushed long-term Treasury yields down, according to Freddie Mac.

The 30-year fixed-rate mortgage averaged 3.6% for the week ending Aug. 15, staying at lows not seen since November 2016, the Freddie Mac Primary Mortgage Market Survey found. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.53%.

"The sound and fury of the financial markets continue to warn of an impending recession, however, the silver lining is mortgage demand reached a three-year high this week," Sam Khater, Freddie Mac's chief economist, said in a press release. "The decline in mortgage rates over the last month is causing a spike in refinancing activity — as homeowners currently have $2 trillion in conventional mortgage loans that are in the money — which will help support consumer balance sheets and increase household cash flow. On top of that, purchase demand is up 7% from a year ago."

At one point, yields on the 10-year Treasury were lower than those for the 2-year, and the 30-year Treasury hit a record low because of all the headlines on trade and economic distress.

"Surprisingly, the response from mortgage rates was relatively subdued, as rates fell only marginally despite the substantial decline in yields," said Zillow economist Matthew Speakman when that company released its own rate tracker. "This could be because rates are now so low that the demand to refinance has increased notably. Borrowers are often quoted a slightly higher rate to refinance than they'd see for a for-purchase loan, as the deal is less lucrative."

The 15-year fixed-rate mortgage averaged 3.07%, up from last week when it averaged 3.05%, Freddie Mac found. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.01%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.35% with an average 0.3 point, down from last week when it averaged 3.36%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.87%.

As for the items that could affect mortgage rate movements in the near term, "some important economic data releases — including retail sales and a key manufacturing index — are due in the coming days, which should offer investors more signals of how trade tensions are impacting economic growth. Should this trade-related market volatility endure, the risk to mortgage rates remains firmly on the upside, even if bond yields continue to fall," Speakman said.