Potential homebuyers got a second week of relief in the form of lower mortgage rates. On Thursday, Freddie Mac announced the average interest rate on a 30-year fixed-rate loan dropped to 5.30%.
The 30-year rate has decreased by 0.50 percentage points over the last two weeks, notes Sam Khater, chief economist at Freddie Mac, largely due to increasing concern of the economy slipping into a recession.
Just two weeks ago, the 30-year rate was averaging 5.81%. Despite this week's significant 0.40 percentage point slide, however, mortgage rates remain well above those seen during the past two years, which averaged around 3%.
"While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown," Khater said.
Freddie Mac's rates for other loan types were substantially lower this week. The 15-year fixed-rate loan is now averaging 4.45%, down 0.38 percentage points. The average rate on the 5/1 adjustable-rate loan is 4.19%, down 0.31 percentage points.
What’s next for mortgage rates?
Despite this week's decline, mortgage rates are expected to increase throughout the rest of the year. However, many experts believe future increases should be at a more moderate pace than what we've seen over the first six months of the year.
What rates do over the next few weeks will be influenced by upcoming economic data releases, including unemployed and inflation readings.
"Concerns about persistent inflation will continue to have a strong influence on mortgage rates until there is ample evidence that price growth is easing," Zillow senior economist Matthew Speakman said in recent comments.
Speakman also noted that "concerns over the economy's longer-term growth prospects, and the potential of a recession in the near future" will also influence rate movement throughout the year.
What's happening in the housing market?
The effects of higher mortgage rates are becoming more evident the further we get in the year.
Rapidly rising rates first had an impact on affordability, driving the monthly costs of purchasing a home up by about 50% compared to this time last year. While some buyers chose to adjust their budgets downward to keep monthly payments affordable, others were pushed out of the market entirely.
With today's rate drop, some of those buyers may be lured back into the market, where they may find a slightly different environment.
As buyers put their purchase plans on hold, demand for homes has started to cool, which has had a positive effect on housing inventory. The total number of active listings increased by 18.7% last month compared to last June, according to Realtor.com. More inventory means buyers who are actively searching for a home will not only have more options but also face less competition.
While home prices continue to increase at a double-digit pace, many sellers are starting to notice the shift in the market. Almost 15% of listed homes across the country last month had their price reduced, according to Joel Berner, senior economic research analyst at Realtor.com. That's the highest rate of price drops since before the start of the pandemic, notes Berner.
"Though the cost of financing a home remains high relative to recent years, buyers will have more chances to find homes in their price range as the undersupplied and overheated housing market starts to cool," Berner commented in prepared remarks.
Mortgage Rates are expected to increase — act now
Now is the time to get ahead of rising Mortgage Rates. To lock in your rate, just click below and take the first step.
Learn MoreMore from Money:
"drops" - Google News
July 07, 2022 at 09:15PM
https://ift.tt/DNwXFs8
Freddie Mac's 30-Year Mortgage Rate Drops Again - Money
"drops" - Google News
https://ift.tt/KiV5AW4
Bagikan Berita Ini
0 Response to "Freddie Mac's 30-Year Mortgage Rate Drops Again - Money"
Post a Comment