Weekly Mortgage Rates Radar: Mortgage Rates Drop Amid Market Turmoil

Rates on the most popular types of mortgages continued on a downward path, according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages fell by another seven basis points (0.07 percent) to 3.94 percent. Conforming 5/1 Hybrid ARM rates also decreased by seven basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.11 percent.

"Slumping oil prices and an unsteady global economic climate are producing downward pressure on mortgage rates," explains Keith Gumbinger, vice president of HSH.com. "Thirty-year fixed rate mortgages have fallen by more than an eighth of a percentage point since the turn of the year, with ARMs slipping a little more than that. As a result, we're enjoying rates at levels not seen since early November."

There are a number of complicated interactions helping rates to fall. Along with declines in oil prices, slower growth in China is pulling down commodity prices, and both will have effects on current and future inflation. If inflation can't get much of a foothold, it is less likely that the Federal Reserve will lift interest rates quickly, and investors are adjusting their stances to this potential. At the same time, the recent financial market turmoil may also make it less likely that the Fed will lift rates anytime soon, perhaps not until March or even later in the year if the turmoil persists.

"Volatile markets last August and September gave the Fed pause in making the first change to rates, pushing adjustments down the road by several months," adds Gumbinger. "It seems likely that this recent and perhaps more severe bout would have the same effect, so there's almost no chance that the Fed will make a move at next week's meeting. After that, we'll need to wait and see how the economy performs, and if the Fed's predictions for growth and inflation are borne out. In the meanwhile, mortgage rates are again flashing green for homeowners and homebuyers."

Average mortgage rates and points for conforming residential mortgages for the week ending January 19, according to HSH.com:

Conforming 30-year fixed-rate mortgage

Average rate: 3.94 percent

Average points: 0.20

Conforming 5/1-year adjustable-rate mortgage

Average rate: 3.11 percent

Average points: 0.13

Average mortgage rates and points for conforming residential mortgages for the previous week ending January 12 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

Average Rate: 4.01 percent

Average Points: 0.20

Conforming 5/1-year adjustable-rate mortgage

Average Rate: 3.18 percent

Average Points: 0.11