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Mortgage Rates Tick Down on Wednesday, as Purchase Activty Falls to January Low

By Alex Dumortier, CFA – Nov 16, 2016 at 4:12PM

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Mortgage rates fell, but the post-election spike appears already to have had an effect: Last week, the Mortgage Bankers Association's Purchase Index fell to its lowest level since January.

Mortgage rates were lower on Wednesday. The average 30-year mortgage rate dipped to 3.87%, which equates to a $469.95 monthly payment per $100,000 borrowed, or $22.58 higher than the equivalent payment would have been a month ago.

For those opting for a shorter term loan, the average 15-year mortgage rate is 3.01%, which equates to a $691.06 monthly payment per $100,000 borrowed, or $14.82 higher than the equivalent payment would have been a month ago.

Rate (U.S. Average)


1 Month Ago


30 Year Fixed Jumbo



30 Year Fixed 



15 Year Fixed



30 Year Fixed Refi



15 Year Fixed Refi



5/1 ARM



5/1 ARM Refi



Rates may include points. Source: Bloomberg

Hedge fund giant says bond market has made a top

In Tuesday's column, I featured anecdotal evidence from a Bloomberg article that the post-election spike in mortgage rates had had a cooling effect on homebuyers' enthusiasm. That appears to be confirmed by today's Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week that ended Nov. 11. Indeed, the Market Composite Index, a measure of mortgage loan application volume, declined 9.2% on a seasonally adjusted basis from the previous week. Excluding refinancing activity, the seasonally adjusted Purchase Index fell 6% to its lowest level since January 2016.

In the same column, I wrote that "last week's political tsunami may ultimately provide the catalyst for the end of a bond bull market that is some 35 years old." That appears to be the view of Ray Dalio, the founder and chief investment officer of Bridgewater Associates, the world's largest hedge fund firm, who wrote yesterday in a LinkedIn post:

[T]he main point we're trying to convey is that there is a good chance that we are at one of those major reversals that last a decade (like the 1970-71 shift from the 1960s period of non-inflationary growth to the 1970s decade of stagflation, or the 1980s shift to disinflationary strong growth)... [T]here's a good chance that the economy/market will shift from what we have gotten used to and what we will experience over the next many years will be very different from that... 

As for the effects of this particular ideological/environmental shift, we think that there's a significant likelihood that we have made the 30-year top in bond prices. We probably have made both the secular low in inflation and the secular low in bond yields relative to inflation.

Food for thought for prospective homebuyers, who may want to sharpen their focus and make the leap to home ownership sooner rather than later.

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