Mortgage rates lowered slightly for the third consecutive week, according to new data from Freddie Mac.
The 30-year fixed-rate mortgage decreased, edging down to 5.09% annual percentage rate (APR) for the week ending June 2, 2022. This is down slightly from 5.1% last week, but up from 2.99% last year.
"Mortgage rates continued to inch downward this week but are still significantly higher than last year, affecting affordability and purchase demand," Freddie Mac Chief Economist Sam Khater said. "Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing. This is welcome news following unprecedented market tightness over the last couple years."
However, the 15-year mortgage increased slightly to 4.32%, up from 4.31% last week and from 2.27% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.04%, down from 4.2% last week but up from 2.64% last year.
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Another interest rate hike could be coming from the Federal Reserve
The Federal Reserve raised interest rates by 50 basis points at its May meeting, the steepest rate hike in about two decades. Prior to that, the Federal Open Market Committee raised interest rates by 25 points during its March meeting. But the Fed is still likely to raise rates several more times this year and into 2023 as it combats decades-high inflation.
"After a tumultuous month characterized by widespread concern around inflation and the possibility of recession, the stock market ended the month of May roughly where it started after a rally last week," Realtor.com Economic Data Analyst Hannah Jones said. "In a meeting with Federal Reserve Chair Powell and Treasury Secretary Yellen, President Biden voiced his support of the Fed’s actions to rein in inflation and pledged to refrain from influencing interest rate decisions.
"Powell and Fed officials continued to emphasize their commitment to taking action in upcoming meetings to rein in prices and achieve 2% inflation," Jones said. "In line with that goal, year-over-year consumer price growth slowed in April for the first time since August 2021, dropping from 8.6% in March to 8.2% in April, a welcome sign of progress."
If you are looking to take advantage of mortgage rates before they rise again, consider refinancing in order to lower your monthly payment. Visit Credible to compare multiple mortgage lenders at once without affecting your credit score.
Affordability challenges slow home-buying activity
As home prices surge and mortgage rates remain higher than this time last year, affordability continues to present a challenge to potential homebuyers.
"The decrease in the mortgage rates over the last couple weeks has offered some relief to buyers who have faced a relentless rise in home prices," Jones said. "High prices and recent interest rate hikes slowed down buyer activity in April as shown by a month-over-month drop in existing home sales (-2.4%), new home sales (-16.6%), and pending home sales (-3.9%), as some buyers opted out of the market altogether."
Home prices surged at all-new highs in March, according to the latest report from Case-Shiller. They reached an annual increase of 20.6% despite anticipation that growth may soon begin to decelerate.
"Homebuyers continued to contend with record-high home prices in May, however, hope is on the horizon as the latest week’s housing data shows another increase in the number of homes for sale compared to last year," Jones said. "And while inventory is still low by historical standards, it is starting to tilt in a more buyer-friendly direction. This is likely to lead to slower price growth in the not-so-distant future as sellers compete for buyers, finally creating a more balanced market. However, those who are currently home shopping will tell you that we’re not there yet, as still-high interest rates and home prices are creating challenges in finding their ideal home."
If you are looking at a home purchase in today’s real estate market or want to refinance your current loan amount to reduce your interest rate, comparing multiple options can help you save. Contact Credible to speak to a home loan expert and get your questions answered.
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