After several sharp spikes and nearly doubling over the last year, mortgage rates took a breather this week, decreasing from 5.81% the previous week to 5.7% this week, according to the latest Primary Mortgage Market Survey (PMMS) from Freddie Mac, released Thursday.
Key findings:
- 30-year fixed-rate mortgage averaged 5.70% with an average 0.9 point as of June 30, 2022, down from last week when it averaged 5.81%. A year ago at this time, the 30-year FRM averaged 2.98%.
- 15-year fixed-rate mortgage averaged 4.83% with an average 0.9 point, down from last week when it averaged 4.92%. A year ago at this time, the 15-year FRM averaged 2.26%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.50% with an average 0.3 point, up from last week when it averaged 4.41%. A year ago at this time, the 5-year ARM averaged 2.54%.
What the experts are saying:
“The rapid rise in mortgage rates has finally paused, largely due to the countervailing forces of high inflation and the increasing possibility of an economic recession,” said Sam Khater, Freddie Mac’s chief economist. “This pause in rate activity should help the housing market rebalance from the breakneck growth of a seller’s market to a more normal pace of home price appreciation.”
Realtor.com® Manager of Economic Research, George Ratiu, commented, “The Freddie Mac fixed rate for a 30-year loan took a breather in the wake of a three-week 72-basis point ascent, declining to 5.70% this week, mirroring the pullback in the 10-year Treasury. With the drumbeat of a possible recession growing louder, investors have been seeking safer assets, driving bond yields lower again this week. Rising prices are eating into consumers’ paychecks, leaving many Americans with less money for discretionary spending. In addition, with inflation outpacing pay raises, most workers are seeing their income fall behind, further straining the finances of buyers who are also facing higher borrowing costs.
“At the midpoint of 2022, housing markets are clearly headed for a reset, as rising supply is blending with cooling demand. The number of homeowners listing their homes for sales has been growing for two straight months compared with a year ago, bringing more options for homebuyers to choose from. The median home price hit a new record in June, reaching $ 450,000, a 17% gain from last year. At that price, combined with today’s fixed rate for a 30-year loan, homebuyers are looking at a monthly payment of about $ 2,100—before adding in taxes, insurance or fees—more than $ 790 higher than June of 2021. Not surprisingly, this is taking a toll on transactions, and as properties sit on the market longer, the share of those with price reductions is rising. Looking at the next few months, I expect to see further moderation in transactions, followed by a sharper slowdown in price growth. Buyers and sellers will find themselves on more equal footing, a welcome shift after two years of a severely lopsided market during the pandemic,” Ratiu concluded.
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