Mortgage rates dip as economy sends mixed signals

Mortgage rates fell this week after mixed economic data grabbed headlines and rattled markets.

Government bonds fall, reverse course

Treasury yields dropped after the Institute of Supply Management released data showing the manufacturing sector contracted in November, the first contraction since November 2012.

The 10-year Treasury yield slid to a one-month low, going from around 2.22 percent Monday to 2.15 percent Tuesday afternoon.

Yields began reversing course Wednesday, following the release of ADP Research Institute’s national employment report, which says businesses added 217,000 jobs in November. The ADP report is used to gauge the outcome of the impending monthly BLS jobs numbers.

“If Friday’s job gains come in anywhere near what ADP thinks they will, then a December rate hike becomes a slam dunk,” Joel Naroff, president and chief economist at Naroff Economic Advisors, says in a blog post — referring to the likelihood that the Federal Reserve will raise interest rates at its policy-setting meeting this month.

Mortgage rates have been trending lower since the middle of November, says Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Md.

“It’s not been a great improvement, but it’s been a slow, steady improvement in interest rates,” he says.

A look at rates this week

• The benchmark 30-year fixed-rate mortgage fell to 4.01 percent from 4.07 percent, according to Bankrate’s Dec. 2 survey of large lenders. A year ago, it was 4.07 percent. Four weeks ago, the rate was 3.98 percent. The mortgages in this week’s survey had an average total of 0.25 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 3.98 percent. This week’s rate is 0.03 percentage points higher than the 52-week average.

• The benchmark 15-year fixed-rate mortgage fell to 3.25 percent from 3.29 percent.

• The benchmark 30-year fixed-rate jumbo mortgage fell to 3.89 percent from 3.94 percent.

• The benchmark 5/1 adjustable-rate mortgage stayed at 3.33 percent.

This marked the third week in a row that the rate on the 30-year fixed has declined. That’s the longest “down” streak this year. The 30-year fixed went up four weeks in a row in April and May.

Pending sales disappoint

Pending home sales were virtually flat in October, according to the National Association of Realtors. The index rose by just 0.2 percent from September but is 3.9 percent higher than the October 2014 rate.

The small increase in the pending home-sales index was much lower than the 1 percent that economists expected, Reuters reports.

“In the most competitive metro areas, particularly those in the South and West, affordability concerns remain heightened as low inventory continues to drive up prices,” Lawrence Yun, NAR’s chief economist, says in a statement.

Home prices increased 1 percent from September to October, and are up nearly 7 percent compared with October 2014, according to data released Tuesday from CoreLogic. The real estate information provider also predicted that home prices will increase 5.2 percent year over year from October 2015 to October 2016.

Mortgage applications ticked down by 0.2 percent last week compared with the previous week, the Mortgage Bankers Association said Wednesday. The unadjusted purchase index fell 28 percent but was 30 percent higher than the same week last year. Results from the MBA’s weekly survey were adjusted for the Thanksgiving holiday.

For those who are in the market and looking to buy, be aggressive with your offers, says Dick Lee, president at Independent Mortgage in Newton, Mass.

“If you see something … between now and New Year’s, jump on it,” he says.