Economic Report: Mortgage rates hit a 2-month low, offering house-hunters the only reprieve from market turmoil

Bloomberg News/Landov

A sign advertising a lower price sits next to a real estate sign in Westerville, Ohio

Rates for home loans tumbled for a third week, making real estate one of the only places to hide — at least for now.

The 30-year fixed-rate mortgage averaged 4.75% in the Dec. 6 week, down six basis points, mortgage liquidity provider Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 4.21%, down from 4.25%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.07%, down three basis points.

Those rates don’t include fees associated with obtaining mortgage loans.

Mortgage rates track the benchmark 10-year U.S. Treasury TMUBMUSD10Y, -2.24%  note. Bond yields have plunged over the past few weeks as investor fears about geopolitics have slammed stocks. As investors snatch up the perceived safety of bonds, their prices rise and yields fall.

See: 4 reasons why the 10-year Treasury yield has tumbled below 3%—again

That’s a “welcome relief” to prospective homebuyers, Freddie Mac Chief Economist Sam Khater said.

Khater’s team on Wednesday published a fresh analysis of the housing supply shortfall. Over the past five decades, they showed, there has only been one year in which the supply of new housing was lower than in 2017. That was 1982, a year in which the Federal Reserve intentionally caused a recession to bring inflation to its knees. Throughout that year, the 30-year fixed-rate mortgage averaged 16.04 – and that was a sign of progress, because it had averaged 16.64% in 1981.

Also read: The new housing play: helping priced-out renters become long-distance landlords

The U.S. needs to be building about 370,000 more units per year than it currently is, the Freddie Mac team said. Put another way, they said, “we estimate that the U.S. economy is about 2.5 million housing units below what is needed to match long-term demand.”

That may be a tough order. Home builders face stiff headwinds, tight margins, and even a skittish customer base. “A troubling sign for 2019 is that the primary concern among prospective buyers is that prices may fall in 2019 which would reduce their equity if they purchase now,” said BTIG Research’s Carl Reichardt, Jr. in a recent client note. “Buyers are aware that builders are motivated sellers,” Reichardt said, yet it’s hard for builders to slash prices.

Read: Toll Brothers orders tumble, but housing market comeback may be in the cards

Be Sociable, Share!

Related Posts


MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.

This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.

The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The educational training program and software services are provided to improve financial understanding.

The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.