The average interest rate for a 30-year mortgage climbed ever so slightly in the last week, but despite the slight increase, May 2016 will still finish up with the lowest average interest rate for any month in the last three years, according to new data from Freddie Mac.
Freddie Mac’s most recent Primary Mortgage Market Survey, released Thursday, showed that the 30-year fixed-rate mortgage averaged 3.64% for the week ending May 26, 2016.
That’s up six basis points from last week, when the 30-year fixed-rate mortgage averaged 3.58%. One year ago at this time, the 30-year fixed-rate mortgage averaged 3.87%.
Sean Becketti, Freddie Mac’s chief economist, said that the market reacted slightly to last week’s release of the minutes from April’s meeting of the Federal Open Market Committee.
The FOMC held off from voting for an increase of the Federal Funds rate during that meeting, but the minutes showed that the FOMC members are at least considering an increase in June, and according to Becketti, the mere possibility of an increase moved mortgage rates up slightly.
But despite that increase, Becketti said that May will still be the best month for mortgage interest rates in three years.
"U.S. Treasury yields moved up in response to the Fed minutes release, which kept alive the possibility of a summer rate-hike,” Becketti said.
“Mortgage rates followed, with the 30-year fixed-rate mortgage increasing 6 basis points to 3.64%. Despite this increase, May ends the month averaging only 3.6%, 1 basis point below April's average, and the lowest monthly average in 3 years,” Becketti said.
“Homebuyers are taking advantage of these historically low rates with April's new-home sales increasing by 16.6%, the fastest pace since January 2008,” Becketti concluded.
According to Freddie Mac’s report, the 15-year fixed-rate mortgage closed out the week with an average of 2.89%, up from last week when it averaged 2.81%. One year ago, the 15-year FRM averaged 3.11%.
Additionally, Freddie Mac’s report showed that the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.87% this week, up from last week when it averaged 2.8%. A year ago, the 5-year ARM averaged 2.9%.