Economists' Outlook

Housing stats and analysis from NAR's research experts.

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage rates.

  • The average rate on a 30-year fixed rate mortgage as measured by the Freddie Mac Primary Mortgage Market Survey, eased last week to 3.98% from 3.99% a week earlier.
  • The decline was precipitated by a steady decline in the 10-year Treasury over the preceding week from a peak of 2.38% on March 19th.
  • The rate on the 10-year Treasury rose towards the end of last week, likely pushing up on the average 30-year fixed, but it fell sharply Monday in response to Friday’s weaker than expected employment figures.
  • The spread between the two rates has historically hovered around 1.5%, but it increased last year as Treasury rates nose-dived in August.  Investors in MBS will demand higher rates to purchase those investments due to heightened pre-payment risk when rates fall.  As a result, mortgage rates do not follow the Treasury down in a lock-step and the spread opens up.  The spread is back below 2%, but may rise as Treasury rates move toward 2% again.
  • The average 30-year FRM is likely to remain steady or ease slightly this week; refinancing activity may grow in the near term as a result, while affordability for purchases will remain near historic highs.

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