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Mortgage rates hold steady, but economists say don’t expect that to last

Mixed economic data meant that interest rates on home loans remained unchanged this week

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By Jacob Passy


Bloomberg News/Landov
Mortgage rates kept even over the last week — if that continues in 2020, it could be good news for home buyers.

Mortgage rates didn’t budge much over the last week amid mixed signals as to the economy’s strength as the holiday season kicked into full drive.

The 30-year fixed-rate mortgage averaged 3.68% during the week ending Dec. 5, unchanged from the previous week, Freddie Mac /zigman2/quotes/202741363/delayed FMCC -1.15%  reported Thursday.

Compared to a year ago, mortgage rates were more than a full percentage point lower. During this same week last year, the 30-year fixed-rate mortgage averaged 4.75%.

The 15-year fixed-rate mortgage dropped one basis point from the previous week to an average of 3.14%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.39%, falling four basis points from a week ago.

Home buyers today are particularly rate-sensitive given the high cost of homes across the country. When rates increased at the beginning of 2019, home-buying activity decreased substantially. But this summer’s drop in rates helped spur an uptick in activity in the housing market, including both sales and home construction.

The trajectory of mortgage rates will largely dictate whether the good times keep rolling for the housing market in the New Year. Economists have projected that rates will stay below 4% next year.

Realtor.com has forecast rates to hit 3.88% by year’s end in 2020, while Fannie Mae’s latest projections show rates dropping to 3.5% in the fourth quarter of 2020 . But these forecasts could be off the mark. This time last year, for instance, Fannie Mae projected that mortgage rates would reach 5% in the fourth quarter of 2019.

Also see: These housing markets will feel the biggest impact from the ‘Silver Tsunami’

“This week the economy sent mixed signals, leaving mortgage rates unchanged,” Sam Khater, Freddie Mac’s chief economist, said in the latest report released Thursday. “Survey data for manufacturing and service industries varied while construction spending fell modestly. However, home-buyer demand continued to improve, rising 8%.”

Mortgage rates generally track the direction of the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -2.61% . The 10-year Treasury yield has seesawed over the last week, on the heels of that same economic data.

Read more: Here’s one thing you should be shopping for this holiday season

/zigman2/quotes/202741363/delayed
US : U.S.: OTC
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Volume: 481,197
Feb. 25, 2020 10:22a
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Market Cap
$1.98 billion
Rev. per Employee
$10.66M
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/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
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Jacob Passy is a personal-finance reporter for MarketWatch and is based in New York.

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Today's Mortgage Rates

Type Rate Yield
30 yr Fixed Jumbo 3.71% 0.00%
30 yr Fixed 3.68% 0.00%
15 yr Fixed 3.17% 0.00%
10 yr Fixed 3.19% 0.00%
30 yr Fixed Refi 3.65% 0.00%
15 yr Fixed Refi 3.16% 0.00%
5/1 ARM 3.65% 0.00%
5/1 ARM Refi 3.78% 0.00%
Data provided by:

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