In November 2018, the average 30-year fixed mortgage rate was about 4.94 percent. In the first week of December, the average rate has dropped to roughly 4.75 percent. Why?
Experts attribute the current rate decline to the stock market's underwhelming performance and the trade deficit, the worst in a decade reports Realtor.com. Senior news editor Claire Trapasso explains that mortgage rates are typically an "inverse reflection" of the bond market's strength, meaning that when bonds are up, mortgage interest rates drop. More investment in mortgage-backed securities means more money to lend to homebuyers.
"Mortgage rates are decided by investors looking for a return on their money over the next 10 years," says the Realtor.com chief economist Danielle Hale. “If people think international trade is going to hurt the economy and U.S. company growth prospects, then they might choose to invest in something safer, like Treasury bonds, and that drives mortgage rates down.”
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