MortgageMortgage Rates

Purchase mortgage rates average 5.10% continuing two-week slide

Rates were at the 2.9% mark same time last year

Purchase mortgage rates this week averaged 5.10% continuing a decline from last week amid a housing market slowdown, according to the latest Freddie Mac PMMS. 

A year ago at this time, 30-year fixed rate purchase rates were at  2.95%. The government-sponsored enterprise index accounts solely for purchase mortgages reported by lenders during the past three days.

“Mortgage rates decreased for the second week in a row due to multiple headwinds that the economy is facing,” said Sam Khater, Freddie Mac’s chief economist. “Despite the recent moderation in rates, the housing market has clearly slowed, and the deceleration is spreading to other segments of the economy, such as consumer spending on durable goods.”

Another index shows rates at a higher mark. Black Knight’s Optimal Blue OBMMI pricing engine, which includes some refinancing data — but excludes cash-out refis to avoid skewing averages, measured the 30-year conforming mortgage rate at 5.32% Wednesday, down from 5.50% the previous week. 

The 30-year fixed-rate jumbo was at 4.90% Wednesday, also down from 5.01% the week prior, according to the Black Knight index. 

This week, mortgage application volume dropped 1.2% from the past week: refi applications declined 4% and purchase apps remained the same, according to the MBA. The MBA found the adjustable-rate mortgage share dipped to 9.4% of total applications.

Mortgage rates are following the Federal Reserve’s (Fed) inflation-fighting monetary policy. Minutes from the Fed’s meeting earlier this month released Wednesday showed policymakers emphasized the need to quickly raise interest rates to bring consumer prices closer to the Fed’s 2% goal. 

The central bank raised the interest rate by a half percentage point May 4 and announced a plan to reduce its $9 trillion asset portfolio. The Fed also has repeatedly signaled it will raise rates six times in 2022, and likely several more in 2023.

According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.31% with an average of 0.8 point, down from last week’s 4.43%. The 15-year fixed-rate mortgage averaged 2.27%

The 5-year ARM averaged 4.20% with buyers on average paying for 0.3 point, up from 4.08% the week prior. The product averaged 2.59% a year ago. 

Economists forecast the tightening monetary policy will reduce originations in 2022 and 2023. The MBA expects loan origination volume to drop more than 35% to about $2.5 trillion this year, from last year’s $4 trillion. Meanwhile, the MBA expects 5.93 million home sales in 2022, compared to 6.12 million in 2021. 

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