The average mortgage rate declined for another week, giving buyers planning to finance a home this spring a little more bang for their buck.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.28%, down from 6.32% the week prior.
A year ago at this time, the 30-year FRM averaged 4.27%.
The 15-year fixed-rate mortgage increased, however, from 5.56% to 5.64%. A year ago, it averaged 3.91%.
“Mortgage rates continue to trend down entering the traditional spring homebuying season,” said Sam Khater, Freddie Mac’s chief economist.
Retreating rates aren’t enough to bring buyers priced out of the market back.
Mortgage application volume, which had ticked up when rates first began declining, is dropping again as buyers contend with high home prices, limited inventory, and broader economic pressures.
“Unfortunately, those in the market to buy are facing a number of challenges, not the least of which is the low inventory of homes for sale, especially for aspiring first-time homebuyers,” Khater noted.
The Mortgage Bankers Association reported that FHA loans saw a significant increase in volume last year, growing by 15%. MBA attributes this to the increasing difficulty for first-time homebuyers to qualify for conventional loans due to rising home prices.
First-time homebuyers often lack the cash to compete for houses with multiple bidders, many of whom are older homeowners with the advantage of record-high equity.
Inflation is also blocking many would-be buyers from entering the market. Americans want to save more money this year for things like down payments and emergency funds, but most worry that inflation will prevent them from doing so.
Among Millennials who intended to buy a home this year, 92% said inflation has impacted their decision-making, causing them to either delay a purchase or spend more than they originally intended.
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