30-Year Hits Lowest Level In Three Months
The AP reported average fixed rates for mortgages “fell this week for a third straight week as global stock markets continued to be pounded by falling oil prices and worries over economic growth,” according to Freddie Mac. Bloomberg News reported rates for 30-year loans dropped from 3.92% last week to 3.81% this week, while rates for 15-year mortgages fell from 3.19% to 3.1%. The article said rates for 30-year loans reached their lowest level in three months. In the Washington Post “Where We Live” blog, Kathy Orton quoted Sean Becketti, Freddie Mac chief economist, as saying, “The Freddie Mac mortgage rate survey had difficulty keeping up with market events this week.” He added, “The 30-year mortgage rate dropped 11 basis points to 3.81 percent, the lowest rate in three months,” which “reflected weak inflation – 0.7 percent CPI inflation for all of 2015 – and nonstop financial market turbulence that is driving investors to the safe haven of Treasuries. However, the survey was largely complete prior to Wednesday’s Treasury rally that drove the yield on the 10-year Treasury below 2 percent, down 29 basis points since the end of 2015.”
What This Means For Small Business
As reported by the AP, falling mortgage rates are a symptom of wide-ranging concerns in the financial markets and may be symptoms of macroeconomic volatility. While lower rates may attract more buyers, in turn leading to greater demand for houses and supporting firms, they may also signify lingering concerns about the health of the US economy. If lower rates do attract more buyers, small businesses may be able to benefit from new housing construction, but if these falling rates signify weak demand, the US economy as a whole may be subject to near-term volatility.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.