Mortgage rates fell this week

Mortgage rates fell this week despite the fact that global market concerns seemed to be getting smaller in the rear view mirror. But U.S. Treasury bond yields fell as investors moved money out of sagging stocks and into bonds.

The Greek debt crisis has been "put on the back burner," says Michael Becker, branch manager at Sierra Pacific Mortgage in White Marsh, Md. "The can has been kicked down the road for a little bit."

Meanwhile, recent data show the housing market is on the mend.

The seller's market prevails

Housing starts jumped about 10 percent in June from a month earlier and were up nearly 27 percent from June 2014, according to new data from the U.S. Census Bureau.

And buyers don't seem to be dragging their feet these days, says Pava Leyrer, chief operating officer at Northern Mortgage Services in Grandville, Mich.

"Houses, especially nicer ones, are going fast," she says.

Existing-home sales rose to a seasonally adjusted annual rate of 5.49 million in June from 5.32 million in May, a 3.2 percent increase. Last month saw the highest pace of home sales since February 2007, according to the National Association of Realtors.

Mortgage applications were virtually unchanged last week compared with the previous week, according to the Mortgage Bankers Association's survey. Refinances fell 1 percent while purchases saw a 1 percent increase.

A look at this week's rates:

• The benchmark 30-year fixed-rate mortgage fell to an average 4.12 percent from 4.17 percent, according to Bankrate's July 22 survey of large lenders. A year ago, the average was 4.28 percent. Four weeks ago, the rate was 4.16 percent. The mortgages in this week's survey had an average total of 0.26 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.04 percent. This week's rate is 0.08 percentage points higher than the 52-week average.

• The benchmark 15-year fixed-rate mortgage fell to 3.3 percent from 3.34 percent.

• The benchmark 30-year fixed-rate jumbo mortgage fell to 4.12 percent from 4.17 percent.

• The benchmark 5/1 adjustable-rate mortgage fell to 3.24 percent from 3.28 percent.

Government bond yields tumble

Investors returned to government bonds this week after stocks grew weaker, The Wall Street Journal reported July 21. As a result, bond prices have increased and yields have dropped. The 10-year Treasury bond yield fell from a peak of 2.4 percent Tuesday morning to 2.32 percent Wednesday afternoon.

The market is also anticipating the Federal Reserve's next moves. St. Louis Federal Reserve President James Bullard said this week there's a significant chance that the Fed will implement its first federal funds rate increase in September, according to a Reuters report.

Homebuyers shouldn't go into panic mode over the likelihood of a rate hike just yet, Leyrer says.

"A quarter percent is not going to be that noticeable to homeowners," she says, referring to the expected value of the Fed's initial rate increase.

However, the overall trend is for mortgage rates to continue going up.

"The risk for higher rates is greater than (for) much lower rates," Becker says.