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Los Angeles house

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Rates for home loans tumbled, sending the benchmark to its lowest since late 2016.

The 30-year fixed-rate mortgage averaged 3.73% in the June 27 week, down 11 basis points, Freddie Mac said Thursday.

The 15-year fixed-rate mortgage averaged 3.16%, down from 3.25%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39%, down nine basis points.

Fixed-rate mortgages track the 10-year U.S. Treasury note, which has recently hovered near two-year lows. Investors turn to safer assets in unsettled times, and nerves have been frayed by the geopolitical maneuverings between the U.S. and China, the U.S. and Iran, the U.S. and Mexico, and more.

Bonds also become more attractive when economic growth stagnates or declines, and recent weeks have brought plenty of signals that a downturn may be closer at hand than expected.

But mortgage rates don’t simply mimic bond yields. They’re also a reflection of how investors view the housing market. Some recent reports suggest that the stepped-up discussion around the future of Fannie Mae and Freddie Mac may be denting investor enthusiasm for mortgage bonds. That may mean there’s only so much farther for mortgage rates to fall.

Fannie and Freddie don’t make loans directly, but buy them from lenders. That allows banks and other financial services companies more flexibility to then offer mortgages to additional customers. For the past few years, they’ve consistently been responsible for about 45% of all new mortgages taken out, according to data compiled by the Urban Institute.

The two enterprises have languished in government control ever since the financial crisis, but this year may be different. As MarketWatch was first to report, back in January, the stars may finally have aligned. A business-friendly White House had the chance to install its man as head of Fannie and Freddie’s regulator just as Congress has essentially thrown in the towel on offering its own reform plan.

The new regulator, Mark Calabria, has said publicly that he doesn’t want to upset the market, and that he supports the broad contours of the housing finance system that’s emerged in the years since the crisis. But there are still plenty of unknowns.

The post Mortgage Rates Slump to a 2 1/2-Year Low appeared first on Real Estate News & Insights | realtor.com®.

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