In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 7.12 per cent, down from last week when they were 7.18 per cent. A year ago, the average was 5.89 per cent.
Sam Khater, Freddie Mac’s chief economist, highlighted the strain on homebuyers from elevated rates and affordability issues.
He said: “For the fourth consecutive week, the 30-year fixed-rate mortgage hovered above seven per cent.
“The economy remains buoyant, which is encouraging for consumers. Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.”
The 15-year fixed rate mortgage averaged 6.52 per cent, down from 6.55 a week ago. A year ago, the average stood at 4.98 per cent.
Applications hit a 27-year low
A separate weekly survey from the Mortgage Bankers Association (MBA) also revealed continued high rates and a dramatic drop-off in applications.
The MBA reported that the average rate for 30-year fixed rate mortgages was 7.21 per cent, down from 7.31 per cent last week. The average rate for the 15-year equivalents decreased to 6.66 per cent from 6.72 per cent last week.
Despite the marginal drop in rates, the MBA survey revealed that mortgage applications had decreased by 2.9 per cent from one week earlier, falling to a 27-year low.
Joel Kan, MBA’s vice president and deputy chief economist, said: “Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates. Both purchase and refinance applications fell, as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates.
“The 30-year fixed mortgage rate decreased to 7.21 per cent last week, but rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market. The refinance index dropped to its lowest level since January 2023, driven by a 6 per cent decline in conventional refinances.”
