In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.27 per cent, down from last week when it stood at 6.28 percent. A year ago, the average was 5.00 per cent.
Although inflation has remained stubbornly high, the drop in rates has led experts at Freddie Mac to give a more positive assessment of the future housing market.
Sam Khater, Freddie Mac’s Chief Economist said: “Mortgage rates decreased for the fifth consecutive week. Incoming data suggest inflation remains well above the desired level but showing signs of deceleration. These trends, coupled with tight labour markets, are creating increased optimism among prospective homebuyers as the housing market hits its peak in the spring and summer.”
Meanwhile, the 15-year fixed rate mortgage averaged 5.54 per cent, down from last week when it averaged 5.64 per cent. A year ago at this time, the average was just 4.17 per cent.
Applications boost for US market
A separate weekly survey from the Mortgage Bankers Association (MBA) also found the same trajectory for 30-year rates and their 15-year equivalents.
The MBA reported that the interest rate for 30-year fixed rate mortgages dropped to 6.30 per cent from 6.40 per cent a week earlier, while the average rate for the 15-year equivalents rose to 5.78 per cent from 5.97 per cent a week ago.
The drop in rates lead to mortgage applications increasing by 5.3 per cent from a week earlier. However, refinancing activity was still slack.
Mike Fratantoni, MBA’s SVP and chief economist said: “Incoming data last week showed that the job market is beginning to slow, which led to the 30-year fixed rate decreasing to 6.30 per cent – the lowest level in two months.
“Prospective homebuyers this year have been quite sensitive to any drop in mortgage rates, and that played out last week with purchase applications increasing.
“Refinance application volume was a mixed bag with total volume essentially flat, conventional volume down for the week. The level of refinance activity remains almost 60 per cent below last year, as most homeowners are currently locked in at much lower rates.”
