Mortgage rates go down in first week of 2018 to 3.95 percent

Mortgage rates are dropping in the first week of the year, according to Freddie Mac’s Primary Mortgage Market Survey.

The average 30-year fixed-rate mortgage was 3.95 percent with an average 0.5 point for the week ending Jan. 4, 2018. This is down from 3.99 percent the previous week. One year ago this week, the 30-year fixed rate mortgage was 4.20 percent.

In addition, the average 15-year fixed rate mortgage rate this week was 3.38 percent with an average 0.5 point. This is also down from last week when it averaged 3.44 percent. The 15-year fixed rate mortgage was 3.44 percent one year ago this week.

Further, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.45 percent with an average 0.4 point for the week ended Jan. 4. This is down from 3.47 percent last week, but up from one year ago this week when it was 3.33 percent.

“Treasury yields fell from a week ago, helping to drive mortgage rates down to start the year,” Len Kiefer, deputy chief economist at Freddie Mac, said. “The 30-year fixed-rate mortgage fell 4 basis points from a week ago to 3.95 percent in the year’s first survey. Despite increases in short-term interest rates, long-term interest rates remain subdued. The 30-year mortgage rate is down a quarter of a percentage point from where it was a year ago and the spread between the 30-year fixed and 5/1 adjustable rate mortgage is the lowest since 2009.”

Kiefer added that with the Federal Open Markets Committee indicating there could be gradual increases in interest rates and inflation rates remaining low, there isn’t much upward pressure on long-term rates.

“Whether that changes due to a tighter labor market and the economic impact of tax reform remains to be seen,” Kiefer said.