Mortgage rates took a surprise turn down last week, averaging 3.89% after weeks of rising, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 3.89%, down from 3.92%. A year ago at this time, the 30-year FRM averaged 2.97%.
“Even with this week’s decline, mortgage rates have increased more than a full percent over the last six months,” said Sam Khater, Freddie Mac’s Chief Economist.
“Overall economic growth remains strong, but rising inflation is already impacting consumer sentiment, which has markedly declined in recent months. As we enter the spring homebuying season with higher mortgage rates and continued low inventory, we expect home price growth to remain firm before cooling off later this year.”
Demand remains high despite rising rates. Bidding wars hit their highest level since at least April 2020, with 70% of home offers from Redfin agents facing competition in January.
However, uncertainty in the aftermath of Russia’s invasion of Ukraine could slow meteoric rate increases, though it’s unclear how its impact will last.
“Geopolitics rattling markets is nothing new,” Lindsey Bell, chief markets and money strategist for Ally Invest, told Kiplinger.
“It’s typical that the immediate reaction to geopolitical events is the most dramatic. The good news is that the impact tends to be short-lived, only lasting anywhere from one to three months.”
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 3.14% with an average 0.7 point.
- A year ago at this time, the 15-year FRM averaged 2.34%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98% with an average 0.3 point.
- A year ago at this time, the 5-year ARM averaged 2.99%.