Keep up with current rates and news at HousingWire’s Mortgage Rates Center. Rates are updated twice weekly based on data from the Mortgage Bankers Association (MBA) and Freddie Mac‘s Primary Mortgage Market Survey (PMMS).
Note: Freddie Mac’s PMMS only covers purchase mortgages. In addition, the PMMS looks at rates from the first three days of the week from lender websites, while the MBA survey covers the rates on apps collected over the prior full week.
The average U.S. mortgage rate dropped five basis points last week to 3.13%. It’s the first decline in mortgage rates in two months.
Sam Khater, Freddie Mac’s chief economist, pointed to a modest decline in treasury yields as the leading factor behind last week’s drop. Traders were hesitant in the market ahead of the Fed releasing its March FOMC minutes as many monitored talks of inflation. However, once again, the Fed showed no signs of policy changes despite forward economic recovery.
As has been the case for several weeks now, rising mortgage rates and low inventory are contributing to the slowdown in mortgage applications, said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“The rapidly recovering economy and improving job market is generating sizeable home-buying demand, but activity in recent weeks is constrained by quicker home-price growth and extremely low inventory,” Kan said.
The 30-year fixed rate moved up to 3.6% after registering at 3.33% last week.
The average U.S. mortgage rate remained essentially unchanged last week, rising by just one basis point to 3.18%. A broader recovery of the economy has almost returned rates back to market “normalcy” as the standard 30-year FRM averaged 3.33% this same time last year.
Although mortgage rates still remain relatively low, the industry is beginning to see a pullback by those looking to enter the market, said Sam Khater, Freddie Mac’s chief economist. Overall, homebuyer demand slipped from 25% above pre-COVID levels at the start of the year, when mortgage rates hit record lows, to 8% above pre-COVID levels recently.
“We even see that purchase demand is diminished today as compared to late May and early June of 2020, when mortgage rates were the same level,” Khater said. “This is confirmation that while purchase demand remains strong, the marginal buyer is feeling the affordability squeeze resulting from the increases in mortgage rates and home prices we’ve experienced in recent months.”
Mortgage applications decreased for the fourth straight week – this time down 2.2%. The 30-year fixed rate also dropped, reported at 3.33% after seven weeks of increases – but it’s still almost half a percentage point higher than the beginning of 2021. Purchase activity is up 6% year-over-year, with the unadjusted purchase index 39% higher than the same week one year ago.
But rising mortgage rates — and home prices that have remained high for months — are making a dent in mortgage applications, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
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