Mortgage Rates Drop For A Second Week

Mortgage rates dropped for yet another week to an average of 5.10%, Freddie Mac reported Thursday.

Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 5.10%, down from last week’s 5.25%. A year ago at this time, the 30-year FRM averaged 2.95%.

“Mortgage rates decreased for the second week in a row due to multiple headwinds that the economy is facing,” said Sam Khater, Freddie Mac’s Chief Economist. 

“Despite the recent moderation in rates, the housing market has clearly slowed, and the deceleration is spreading to other segments of the economy, such as consumer spending on durable goods.”

5-year ARMs did rise, however, from 4.08% a week ago to 4.20%.

ARMs have become appealing to homebuyers trying to cut costs in the face of soaring prices.

The MBA reported that the national median payment applied for by applicants was up 8.8% to $1,889 from $1,736 in March, a steep drop in affordability.

“Despite strong employment and wage growth, housing affordability has worsened since the start of the year. Mortgage payments are taking up a larger share of homebuyers’ incomes, and sky-high inflation is making it more difficult for some would-be buyers to save for a down payment or come up with the additional cash they need to afford a higher monthly payment,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America.

A Redfin analysis found that the monthly payment for buyers who took out a 5/1 ARM was about $2,164 during the four weeks ending May 12, 11% – or $260 – lower a month than the estimated $2,423 payment for buyers who took out a 30-year fixed-rate mortgage. 

Additional findings from Thursday’s report:

  • 15-year fixed-rate mortgage averaged 4.31% with an average 0.8 point.
  • A year ago at this time, the 15-year FRM averaged 2.27%.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.20% with an average 0.3 point.
  • A year ago at this time, the 5-year ARM averaged 2.59%