The 30-year fixed-rate mortgage (FRM) decreased to 7.09% from 7.22% last week, the first decrease seen since they began rising five weeks ago in March, according to the latest Primary Mortgage Market Survey® from Freddie Mac.
This week’s numbers:
- The 30-year FRM averaged 7.09% as of May 9, 2024, down from last week when it averaged 7.22%. A year ago at this time, the 30-year FRM averaged 6.35%.
- The 15-year FRM averaged 6.38%, down from last week when it averaged 6.47%. A year ago at this time, the 15-year FRM averaged 5.75%.
What the experts are saying:
“After a five week climb, mortgage rates ticked down following a weaker than expected jobs report,” said Sam Khater, Freddie Mac’s chief economist. “An environment where rates continue to hover above 7% impacts both sellers and buyers. Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated. These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment.”
Realtor.com Chief Economist, Danielle Hale commented:
“The Freddie Mac fixed rate for a 30-year mortgage declined 13 basis points to 7.09% this week after 5 straight weeks of gains. Following the May Fed meeting, Chair Powell reemphasized the committee’s commitment to 2% inflation, and did not close off options, but acknowledged that a future rate cut was more likely than a rate hike as inflation is expected to relent. In other words, short-term rates have likely peaked, but further improvement in inflation and the inflation outlook are needed to see rates move lower.
“To underscore this point, Friday’s April jobs report showed a decent, but weaker than expected result, with fewer jobs added, slower wage growth, and an uptick in unemployment. A weaker jobs report is typically consistent with a cooler economy and less inflationary pressure, and investors have driven long-term rates lower, in response. The yield on the 10yr has dipped from 4.7% in the week before the Fed meeting to less than 4.5% this week, and mortgage rates followed suit with the biggest weekly decline since mid-March.
“This improvement is welcome news for home shoppers, who are also seeing some improvement in market conditions in the form of more homes for sale relative to one year ago according to Realtor.com data. However, affordability continues to be a challenge as home prices steady and mortgage rates remain high. In fact, the income required to finance 80% of the typical home listing exceeded $100,000 in 34 of the 50 largest markets in April as rates topped 7%, and in the priciest 6, more than $200,000 is needed.
“Whether this week’s friendlier mortgage rate momentum will persist in the near-term depends largely on April inflation data due out next week. Rental costs, a major driver of shelter inflation, are expected to begin easing later in 2024 as the CPI’s methodology, which samples all renters, catches up to trends in asking rents that have declined from one year ago for eight straight months according to the Realtor.com March Rental Trends report.”
