In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.35 per cent, down from last week when it stood at 6.39 percent. A year ago, the average was 5.30 per cent.
Experts at Freddie Mac hope that a fortnight of rate falls can turn into a longer run as inflation begins to moderate.
Sam Khater, Freddie Mac’s chief economist, said: “This week’s decrease continues a recent sideways trend in mortgage rates, which is a welcome departure from the record increases of last year.
“While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023. This should bode well for the trajectory of mortgage rates over the long term.”
The 15-year fixed rate mortgage also dropped, averaging 5.75 per cent, down from last week when it averaged 5.76 per cent. A year ago the average was 4.48 per cent.
Applications rise but housing supply holds back growth
A separate weekly survey from the Mortgage Bankers Association (MBA) also saw rates falling.
The MBA reported that the interest rate for 30-year fixed rate mortgages decreased to 6.48 per cent from 6.50 per cent a week earlier, while the average rate for the 15-year equivalents fell to 5.91 per cent from 6.01 per cent a week ago.
The drop in rates saw applications increase by five per cent from one week earlier.
Joel Kan, MBA’s vice president and deputy chief economist, said: “Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth. Mortgage rates for all surveyed loan types decreased over the week with the 30-year fixed rate at 6.48 per cent.
“Purchase applications increased five per cent last week but were still more than 30 per cent below last year’s level. Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many homebuyers.”
