MortgageMortgage Rates

Purchase mortgage rates are back above 5%

The 30-year fixed-rate mortgage increased this week to average 5.22%, up from last week’s 4.99%

Purchase mortgage rates continue their roller coaster ride – they moved above 5% this week, according to the latest purchase mortgage survey from Freddie Mac.

The 30-year fixed-rate mortgage increased this week to average 5.22%, up from last week’s 4.99%. A year ago this time, rates averaged 2.77%. The index compiles rates reported by lenders during the past three days.   

“The 30-year fixed-rate went back up to well over 5% this week, a reminder that recent volatility remains persistent,” Sam Khater, chief economist at Freddie Mac, said in a statement.

Mortgage rates tend to align with the 10-year U.S Treasury yield, which increased five basis points in one week to 2.78% Wednesday. 

The volatility in rates reflects the Federal Reserve actions to control persistent inflation. The Fed raised interest rates by 75 bps in its July’s meeting, marking its fourth rate hike this year.

So far, the tightening monetary policy brought a technical recession, as the gross domestic product fell by 0.9% in the second quarter, marking the second consecutive decline. (The Biden administration has refused the country is in a recession, citing a strong labor market.)

Creating a path to success in today’s purchase market

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In addition, year over year, the Consumer Price Index (CPI) for all items rose 8.5% in July, down from the 9.1% yearly increase reported a month ago. Inflation did not increase from June to July.

“Although rates continue to fluctuate, recent data suggest that the housing market is stabilizing as it transitions from the surge of activity during the pandemic to a more balanced market,” Khater said.

He added: “Declines in purchase demand continue to diminish while supply remains fairly tight across most markets. The consequence is that house prices likely will continue to rise, but at a slower pace for the rest of the summer.”

Regarding borrowers demand for mortgage loans, according to the Mortgage Bankers Association (MBA), the market composite index, a measure of mortgage loan application volume, increased 0.2% for the week ending Aug. 5.

The refinance index rose 4% from the previous week, and the purchase index was down 1%.

Loan officers told HousingWire that, amid volatility, they had seen an uptick in cash-out refis. There is a general concern with the trajectory of the economy, and borrowers worry their home may go down in value as the market cools – in this case, they would have less equity to access.

On HousingWire’s Mortgage Rates Center, Black Knight’s Optimal Blue OBMMI pricing engine measured the 30-year conforming mortgage rate at 5.351% Wednesday, down from 5.448% the previous week. Meanwhile, the 30-year fixed-rate jumbo was at 5.261% Wednesday, down from 5.472% the week prior, according to the Black Knight index. 

According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.59% with an average of 0.7 point, up from last week’s 4.26%. The 15-year fixed-rate mortgage averaged 2.15% a year ago. The 5-year ARM averaged 4.43% this week, up from 4.25% the previous week. The product averaged 2.44% a year ago. 

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