Mortgage rates fell to fresh lows last week as worries about the strength of the economic recovery dragged Treasury yields further down. Housing continues to be a hard market to call with more economists and market watchers taking a bullish stance this week, persuaded by promising highlights in another batch of mixed data.
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The 30-year fixed mortgage rate hit 3.49% and the 15-year dropped to 2.8%, according to data from Freddie Mac. Those figures are down from 3.53% and 2.83%, respectively, the week prior. The 30-year rate is now more than 1% lower than a year ago, when it averaged 4.55%. (Track the rate in the chart below.)
Average 30-year fixed-rate mortgage - Freddie Mac
That's not lost on homeowners looking to refinance. Mortgage application volume ticked 0.9% higher, according to an index from the Mortgage Bankers Association, while the Refinance Index increased 2% from the previous week to its highest level since April 19, 2009. The refinance share of mortgage activity increased to 81% of total applications from 80% the previous week.
The housing bulls and bears have been long locked in debate about whether a bottom is in, imminent -- or neither. This week Zillow Chief Economist Stan Humphries exited the bear camp and said "it seems clear" the bottom is in, citing organic strength that's appearing in the housing market despite lackluster jobs growth.
Zillow's U.S. home value index climbed 0.2% in the second quarter compared with a year ago, the first increase since 2007. The index rose 2.1% vs. the first quarter, the strongest gain since 2005. "Looking ahead, two in five, or 67 of the 156 markets covered by the Zillow Home Value Forecast, are expected to see increases in home values over the next year," according to the report.
The Federal Housing Finance Association housing price index rose in May, by 0.8%, after climbing 0.7% in April. But the data continue to be mixed: New home sales for June came in below expectations, at 350,000, down from 382,000 in May, according to a report on Wednesday. And pending home sales fell 1.4% in June after a 5% jump in May, according to data released earlier today.
The result? More debate on the housing bottom.
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