In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.71 per cent, down from last week when it stood at 6.79 per cent. A year ago, the average was 5.23 per cent.
While the drop should help buyers, the main issue in the US market is a lack of housing stock, according to Sam Khater, Freddie Mac’s chief economist.
“Mortgage rates decreased after a three-week climb,” said Khater. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers.”
The 15-year fixed rate mortgage also fell from last week, averaging 6.07 per cent, down from 6.18 per cent last week. A year ago the average was 4.38 per cent.
Rates down, applications down, inventory down
A separate weekly survey from the Mortgage Bankers Association (MBA) also saw rates fall.
The MBA reported that the average rate for 30-year fixed rate mortgages decreased to 6.81 per cent from 6.91 per cent a week earlier, while the average rate for the 15-year equivalents dropped to 6.25 per cent from 6.41 per cent a week ago.
Meanwhile, mortgage applications fell 1.4 per cent from one week earlier.
Joel Kan, MBA’s vice president and deputy chief economist said: “Mortgage rates declined last week from a recent high, but total application activity slipped for the fourth straight week. The 30-year fixed rate dipped to 6.81 percent, 10 basis points lower than last week but still the second highest rate of 2023.”
“Overall applications were more than 30 per cent lower than a year ago, as borrowers continue to grapple with the higher rate environment. Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers.
“There was less of a decline in government purchase applications last week, which was consistent with a growing share of first-time home buyers in the market.”
