Mortgage rates tanked last week, dropping from an average 5.70% to 5.30%, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 5.30%. A year ago at this time, the 30-year FRM averaged 2.90%.
“Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise,” said Sam Khater, Freddie Mac’s Chief Economist.
“While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown.”
Potential buyers are backing away from the market due to the soaring cost of purchasing a home, forcing sellers to respond with lower asking prices or price cuts.
But researchers at Florida Atlantic University and Florida International University say anecdotal signs of a slowdown have yet to translate into lower home prices, with average prices still rising in nearly all of the 100 largest housing markets.
“There are plenty of reports that mortgage applications and home showings are falling as interest rates rise,” said Ken H. Johnson, Ph.D., economist in FAU’s College of Business.
“We expect prices eventually will level off as well, particularly if a recession occurs and lending rates remain high. But so far prices continue to rise in the vast majority of markets.”
Recession fears are rapidly growing, with 70% of economists expecting it by 2023.
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 4.45% with an average 0.8 point.
- A year ago at this time, the 15-year FRM averaged 2.20%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.19% with an average 0.4 point.
- A year ago at this time, the 5-year ARM averaged 2.52%