The crazy stock market ride of the past week has driven down the 30-year mortgage rate to 3.84%, its lowest level since May.
The extreme panic in the stock market sent investors to the safety of the U.S. government bond market. The 10-year Treasury bond, which fell below 2% at the beginning of last week, is often the benchmark for mortgage rates. But it has slowly started to rise, which in turn will drive up mortgage rates.
Mortgage giant Freddie Mac calculates the average mortgage rates throughout the country by surveying a large spectrum of lenders at the start of each week. Keep in mind that the average rate is a baseline and does not include extra fees, points, and customary loan charges that borrowers must pay but are often included in a slightly higher rate.
The Federal Reserve has not ruled out a rate hike at their upcoming September meeting. This move would have a much greater impact on borrowers with shorter term rates and home loans such as a home equity line of credit (HELOC), or an adjustable rate mortgages (ARM).
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