For the eighth straight month, information compiled by Freddie Mac shows that mortgage rates continued to decline. As of August 2019, the 30-year FRM – Commitment rate, fell by 15 basis points to 3.62 percent from 3.77 percent in July. The cycle peak was 4.87 percent in November.
According to the July 2019 Federal Open Market Committee meeting statement, as expected, the Fed voted for a quarter-point cut in target federal funds rate to a range of 2.00-2.25 percent. This move was a result of growing global uncertainty for the economic outlook as well as muted inflation pressures. Outlooks expressed by FOMC members continued to call for generally solid GDP growth, strong labor markets, and a rise of inflation to be consistent with the Fed’s 2.00 percent symmetric target. Despite different views on inflation, as shown by the split in voting, financial vulnerabilities, and the potential implications of trade and other uncertainties, members generally agreed to adopt a flexible policy stance in setting the future target range for the federal funds rate.
The spread between the yield on the 10-year Treasury note and that of the 2-year note turned negative twice in the month of August, making August a very volatile market for traders. At the end of the month, the 10-year Treasury rate was down at 1.50 percent. It was at 2.05 percent at the end of July. The lower rate 10-year Treasury rate has contributed to low mortgage interest rates in the last few weeks. The average 30-Year Fixed market rate, according to Freddie Mac, was at 3.55 percent at the end of August compared to 3.75 percent at the end of July. At the beginning of 2019, the average 30-Year Fixed market rate was 4.51 percent.