The average 30-year fixed rate mortgage fell to 3.76% in the week ended March 3, from 3.89% in the previous week amid geopolitical tensions caused by Russia’s war in Ukraine, the sources said latest information Freddie Mac PMMS Mortgage Survey.

A year ago, the 30-year fixed-rate mortgage averaged 3.02%. The PMMS report focuses on traditional, compliant, fully amortizing home loans for borrowers who put down 20% and have excellent credit ratings. The survey found that buyers paid an average of 0.8 points.

According to Sam Khater, Freddie Mac’s chief economist, investors gravitated towards the safety of bonds due to the geopolitical conflict, which caused US Treasury yields to fall this week, affecting mortgage rates.

“While inflationary pressures persist, the cascading effects of the war in Ukraine have created market uncertainty. Consequently, interest rates are expected to remain low in the short-term but are likely to rise in the coming months,” Khater said.

Mortgage rates are usually moving in line with the 10-year Treasury yield, which hit 1.86% yesterday, compared to 1.94% last Wednesday. The 15-year fixed-rate mortgage averaged 3.01% last week, up from 3.14% the previous week. A year ago at this point it averaged 2.34%.

Economists have said the war in Ukraine could lead to a short-term drop in mortgage rates as investors flock to safe havens such as mortgage-backed securities and bonds.

However, the longer-term inflation caused by the conflict, mainly via oil prices, will cause mortgage rates to rise.

federal reserve Pro Tempore Chairman Jerome Powell is expected to hike rates by 25 basis points this month. The first rate hike is expected in a little less than two weeks, coinciding with the March Federal Open Markets Committee meeting scheduled for March 15-16.

The expectation of higher interest rates reduces borrowers’ appetite for new loans. Mortgage applications fell 0.7% in the week ended February 25th. Compared to the same week a year ago, applications fell by 41.7%.

The mortgage industry has entered a buying era, with refinancing requests falling below 50% of the mix last week for the first time since June 2019 Association of Mortgage Banks (MBA) reported on Wednesday.