Mortgage Rates Friday, Feb. 17: Steep Drop; Building Permits Up

Mortgage Rates, Mortgages
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Thirty-year fixed mortgage rates plunged eight basis points today, while 15-year fixed loans and 5/1 ARMs dropped by four and three basis points, respectively, according to a NerdWallet survey of mortgage interest rates published by national lenders Friday morning.

The sharp drop in mortgage rates is a sign that investors are losing some confidence about economic growth in 2017, says Michael Fratantoni, chief economist and senior vice president of research and industry technology with the Mortgage Bankers Association.


MORTGAGE RATES TODAY, Friday, FEB. 17

(Change from 2/16)
30-year fixed: 4.34% APR (0.08)
15-year fixed: 3.71% APR (0.04)
5/1 ARM: 3.80% APR (0.03)

 

After the election, mortgage rates rose by 75 basis points on expectations of faster economic growth and somewhat higher inflation, Fratantoni tells NerdWallet. Those expectations drove increases in both the Treasury and mortgage rates, he said.  Since then, rates have stayed in a narrow range between 4% and 4.3% for 30-year fixed loans, he adds.

“Within the last week, we’re hearing more commentary from investors that they’re less confident in items like tax reform and infrastructure moving as quickly as they thought, so they’re pulling back a little bit,” Fratantoni says. “Overall, we’ll see a pullback in the stock market and the trends in mortgage rates.”

It’s unlikely the drop in rates will spur much refinance activity among homeowners, he adds, because many of them refinanced when rates were below 4%. On the purchase side, rates have less of an impact on the decision to buy, which is more dependent on consumers’ confidence in their own economic reality, housing conditions, and signs in the job market, than rate fluctuations, Fratantoni says.

Housing starts dip; building permits up in January

Housing starts began the year with little change; however, building permits increased, which is good news for markets with tight inventories, according to new data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Privately owned housing starts dipped 2.6% to 1.25 million in January, from 1.28 million in December, according to a joint press release from the Census Bureau and HUD. In comparison with a year ago, housing starts were up 10.5% from the January 2016 rate of 1.13 million. 

Furthermore, building permits also rose month-over-month by 4.6% in January and 8.2% year-over-year, signaling that homebuilders are “[hitting] the ground running in 2017,” wrote Ralph McLaughlin, chief economist with Trulia, in a blog post Thursday.

“The big uptick in permits should be good news for inventory-constrained home buyers, as permits eventually become starts, which in turn become new homes for sale,” McLaughlin wrote. “As a result, we shouldn’t be surprised to see a strong increase in starts in mid-2017.”

» MORE: Calculate your monthly mortgage payment

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Deborah Kearns is a staff writer at NerdWallet, a personal finance website. Email: dkearns@nerdwallet.com. Twitter: @debbie_kearns.