Mortgage rates hit 13-week low in wake of Iran crisis

Tensions in the Middle East caused mortgage rates to tumble, but the decline wasn't as steep as might have been expected.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.64% with an average 0.7 point. (Points are fees paid to a lender equal to 1% of the loan amount and are in addition to the interest rate.) It was 3.72% a week ago and 4.45% a year ago. The 30-year fixed rate is at its lowest level in 13 weeks. It hasn't been above 4% since May.

The 15-year fixed-rate average dropped to 3.07% with an average 0.7 point. It was 3.16% a week ago and 3.89% a year ago. The five-year adjustable rate average sank to 3.3% with an average 0.3 point. It was 3.46% a week ago and 3.83% a year ago.

"The Iranian attacks sent markets into turbulence, racing for safe-haven, but it was very short-lived and bonds didn't make much of a move," said Elizabeth Rose, certified mortgage planning specialist at AmCap Home Loans in Plano, Texas.

"Following Trump's address markets retraced. Sensing de-escalation, the safe-haven trade began to unwind. Geopolitical unrest tends to overshadow economic data when it comes to the financial markets. Continued tension would likely result in more market turbulence. Should the geopolitical news settle down, economic reports will take the front seat again."

The drone strike that killed Iranian Maj. Gen. Qasem Soleimani last week caused financial markets to stumble. Stocks fell and bond prices rose as investors feared an escalation in the conflict. The yield on the 10-year Treasury dipped to 1.8% on Friday. But after President Donald Trump's address to the nation on Wednesday, it rebounded to 1.87%.

The Freddie Mac survey was done prior to Trump's speech, which means the uptick in bond yields was not reflected in it. The federally chartered mortgage...