U.S. long-term mortgage rates were flat to slightly higher this week, hovering around three-year lows after the Federal Reserve’s cut in its benchmark interest rate for the first time in a decade.
The Fed announced the landmark rate cut Wednesday after a two-day meeting of its policymakers. Mortgage buyer Freddie Mac said Thursday the average rate on the key 30-year mortgage was unchanged from last week at 3.75%. That’s a historically low level for the 30-year rate, which a year ago stood at 4.60%.
The average rate for 15-year, fixed-rate home loans ticked up to 3.20% from 3.18% last week.
The Fed made the quarter-point rate reduction with the aim of countering the impact of President Donald Trump’s trade wars, stubbornly low inflation and global economic weakness. The risk of a recession in the U.S. remains relatively low.
Fed Chairman Jerome Powell left open the possibility of future rate cuts, but perhaps not as many as Wall Street had been hoped for. The Dow Jones Industrial Average tumbled Wednesday to finish down 333 points, or 1.2%. The yield on the 10-year Treasury note fell to 2.01% from 2.06% late Tuesday, a sharp drop that likely will be reflected in long-term mortgage rates in the immediate future.
The Fed’s rate cut unwound some of the credit tightening from last year, when rates were raised four times.
Freddie Mac surveys lenders across the country between Monday and Wednesday each week to compile its mortgage rate figures.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.
The average fee on 30-year fixed-rate mortgages rose this week to 0.6 point from 0.5 point.
The average fee for the 15-year mortgage was unchanged at 0.5 point.
The average rate for five-year adjustable-rate mortgages eased to 3.46% from 3.47% last week. The fee held steady at 0.4 point.
The Federal Reserve cut its key interest rate Wednesday for the first time in a decade to try to counter the impact of President Donald Trump’s trade wars, stubbornly low inflation and global weakness.
It left open the possibility of future rate cuts, but perhaps not as many as Wall Street had been hoping for. During a news conference, Chairman Jerome Powell struggled to find just the right words to articulate the Fed’s strategy and what might prompt future rate cuts at a time when the risk of a recession in the United States seems relatively low.