Mortgage rates reversed course last week and followed bond yields lower after the release of the minutes of the most recent Federal Reserve Open Market Committee meeting.
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The minutes revealed committee members were concerned about a deceleration in economic activity in recent months and that more monetary stimulus is potentially on tap. Since then, the Commerce Department reported that GDP climbed at an annualized rate of 1.7% in the second quarter. That's up from the original estimate of 1.5%, but still denotes a slowdown from previous quarters.
The 30-year fixed rate hit 3.59%, down from 3.66% last week, erasing the last two weeks of gains. The 15-year fixed rate dropped to 2.86%, down from 2.89%. The drop comes after a four-week increase that followed months of new record lows. (See the chart below.)
Average 30-year fixed-rate mortgage - Freddie Mac
One year ago, the 30-year and 15-year rates were at 4.22% and 3.39%, respectively.
Other data this week showed home prices continued to creep higher in June. The Case Shiller Home Price Index rose 0.9% in from May and was up 0.5% from a year prior.
A look at mortgage applications shows demand for refinancing continued to decline last week despite a turn lower for rates, with the Mortgage Bankers Association's Refinance Index falling 6%. The seasonally adjusted purchase index increased 1% from the week before.