Mortgage rates declined for the first time after a weeks-long upward streak, averaging 5% last week, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 5%, down from 5.11% last week. A year ago at this time, the 30-year FRM averaged 2.98%.
“The combination of swift home price growth and the fastest mortgage rate increase in over forty years is finally affecting purchase demand,” said Sam Khater, Freddie Mac’s Chief Economist.
“Homebuyers navigating the current environment are coping in a variety of ways, including switching to adjustable-rate mortgages, moving away from expensive coastal cities, and looking to more affordable suburbs. We expect the decline in demand to soften home price growth to a more sustainable pace later this year.”
Mortgage loan application volume plummeted by 8.3% last week, as buyers balk at the rising cost to buy a home. This may be further exacerbated by the stock shortage.
Home sellers may be equally wary of putting their homes on the market. Redfin reported that 51% of homeowners currently have a rate under 4%, and might be reluctant to sell and find a new home that will increase their monthly payments.
“Prospective homebuyers have pulled back this spring, as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“The recent decrease in purchase applications is an indication of potential weakness in home sales in the coming months.”
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 4.40% with an average 0.8 point.
- A year ago at this time, the 15-year FRM averaged 2.31%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.78% with an average 0.3 point.
- A year ago at this time, the 5-year ARM averaged 2.64%.