- The 30-year fixed mortgage rate fell to its lowest in six weeks, tracking falling bond yields.
- The rate fell to 6.45%, helping fuel another week of increases in mortgage applications.
- Bond yields dropped as investors rushed into US government debt, seeking shelter amid the SVB crash.
The rate on the most popular home loan in the US fell to a six-week low last week as it tracked tumbling Treasury yields amid the turmoil in the banking sector this month.
The 30-year fixed mortgage rate fell to 6.45% from 6.48% in the week ended March 24 for loans meeting government-agency limits of $726,200 or less, according to figures released by the Mortgage Bankers Association on Wednesday.
The rate was the lowest since February 15, when it sat at 6.39%.
The 30-year rate fell as investors rushed into US government debt, looking for shelter from the turmoil over deposits at regional banks. With prices rising, yields slumped. The 2-year yield, sensitive to expectations for Federal Reserve policy, fell as low as 3.555% on March 24. A week earlier, that yield had reached 4.25%.
“While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in the survey statement.
Mortgage applications increased 2.9% from a week earlier but were lower by 35% compared with the same week a year ago.
The 2-year yield pushed above 5% in early March, then later plunged in the face of stress in the banking system.
Customers in US regional banks began pulling funds after the implosion of Silicon Valley Bank. Depositors tried to yank $100 billion from SVB on the day it was shut down by regulators. The figure was given by Michael Barr, the Federal Reserve’s vice chair for supervision, to the Senate Banking Committee on Tuesday.
The 2-year yield in early March spiked up to 5% after Fed Chair Jerome Powell suggested that sticky inflation could lead to policymakers upsizing the pace of interest rate increases. Powell later said policy makers had considered pausing rate hikes because of the banking turmoil but decided to deliver a steady rate hike of 25 basis points, to 4.75%-5%.
More broadly in the US housing market, home prices on the West Coast are sliding while home prices on the East Coast are rising, according to data from Black Knight.