Stock Shock Shakes Mortgage Rates

Mortgage rates tumbled to the lowest level since May in the midst of  "substantial and ongoing global volatility out of China" this week, Freddie Mac reported in its weekly mortgage market survey. 

"Events in China generated eye-catching volatility in equity markets worldwide over the past week," says Sean Becketti, Freddie Mac's chief economist. "Interest rates also rocked up and down — although to a lesser extent than equities — as investors alternated between flights to quality and bargain hunting among beaten-down stocks. Amidst all this confusion, the 30-year mortgage rate dropped to 3.84 percent, the lowest mark since May and the fifth consecutive week with a rate below 4 percent."   

Becketti also notes that the "unsettled state of global markets" will likely make the Federal Reserve rethink before taking any action on raising short-term interest rates in September as well. 

"If that's the case, the 30-year mortgage rate may remain subdued in the short-to-medium term, providing support for continued strength in the housing sector," Becketti says.  

Freddie Mac reported the national averages with mortgage rates for the week ending Aug. 27: 

•  30-year fixed-rate mortgages: average 3.84 percent with a average 0.6 point, dropping from last week's 3.93 percent normal. A year prior, 30-year rates average 4.10 percent.

•  15-year fixed-rate mortgages: average 3.06 percent with a average 0.6 point, dropping from last week's 3.15 percent average. Last year, 15-year rates average 3.25 percent.

•  5-year hybrid adjustable-rate mortgages:  average 2.90 percent with a average 0.4 point, dropping from last week's 2.94 percent average. Last year, 5-year ARMs average 2.97 percent.

•  1-year ARMs: average 2.62 percent with a average 0.3 point, staying the same from last week ago. Last year, 1-year ARMs average 2.39 percent.