Mortgage rates follow stock prices downward

Mortgage rates brought in the new year by falling this week after concerns about the economy resurfaced.

Treasury yields slide

Government bond yields have been sinking this week as investors retreat to Treasury notes in response to China’s startling stock market performance, in which share prices plunged.

Additionally, the U.S. Census Bureau released data Monday showing that construction spending fell 0.4 percent from October to November. This is the first drop in about a year and a half, according to Reuters.

The 10-year Treasury yield dropped from 2.29 percent Dec. 31 to around 2.18 percent the afternoon of Jan. 6.

Interest rates on mortgages usually move in the same direction as long-term Treasury yields.

A look at rates this week

• The benchmark 30-year fixed-rate mortgage fell to 4.11 percent from 4.15 percent, according to Bankrate’s Jan. 6 survey of large lenders. A year ago, it was 3.85 percent. Four weeks ago, the rate was 4.06 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 4 percent. This week’s rate is 0.11 percentage points higher than the 52-week average.

• The benchmark 15-year fixed-rate mortgage fell to 3.38 percent from 3.39 percent.

• The benchmark 30-year fixed-rate jumbo mortgage fell to 4.08 percent from 4.1 percent.

• The benchmark 5/1 adjustable-rate mortgage fell to 3.46 percent from 3.49 percent.

Will the upcoming jobs report impact rates?

The ADP Research Institute’s latest national employment report shows that 257,000 jobs were added in December. ADP’s report typically indicates what to expect from the Bureau of Labor Statistics’ forthcoming employment situation report.

Rates likely won’t be affected very much by Friday’s jobs report, says Brett Sinnott, vice president of capital markets at CMG Financial in San Ramon, Calif.

“I think, if anything, you’re going to see the stock market reacting a lot to Friday’s report,” he says. “I think as far as mortgage rates we’re going to stay in this area more than likely until the (Federal Reserve) decides to raise (the federal funds rate) again.”

Think you’re ready to buy?

National home prices rose 0.5 percent from October to November and 6.3 percent year over year from November 2014, according to real estate data firm CoreLogic.

Prices are expected to have increased 5.4 percent from November 2015 to November 2016.

If a home is on your vision board for the year, be sure your financial situation is picture-perfect, says John Stearns, senior mortgage banker at American Fidelity Mortgage in Mequon, Wis.

“Get preapproved early (and) have your credit checked out,” he says. “Plan for possible delays in closing with the new (mortgage disclosure rules); even though we are kind of used to (the rules) by now, there are still kinks to be worked out.”