Mortgage rates nosedived by 31 basis points last week, dropping below 5% for the first time since April, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 4.99%. Last week it averaged 5.30%, and a year ago at this time, the 30-year FRM averaged 2.77%.
“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth,” said Sam Khater, Freddie Mac’s Chief Economist.
“The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, especially as the Federal Reserve attempts to navigate the current economic environment.”
Recession fears are adding to a dip in homebuyer demand spurned on by soaring prices and rising interest rates.
The U.S. saw its GDP drop for a second consecutive quarter last week which, by one metric, means the economy has entered a recession.
“Downbeat economic news has been pressing mortgage rates lower in the past few weeks,” Holden Lewis, a home and mortgage expert at NerdWallet, told the Washington Post.
“This has happened despite the persistence of high inflation, a factor that tends to lift interest rates higher. Bond investors have been oscillating between optimism about the inflation outlook, when they send mortgage rates lower, and pessimism, when they let rates rise. The last week has been marked by a trough in rates amid chatter about a possible recession. But already, mortgage rates are bouncing upward; even as it’s not yet showing up in the weekly rate average.”
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 4.26% with an average 0.6 point.
- A year ago at this time, the 15-year FRM averaged 2.10%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.25%, down only 0.4%, with an average 0.3 point.
- A year ago at this time, the 5-year ARM averaged 2.40%