The 30-year fixed-rate mortgage (FRM) decreased slightly this week, from 5.30% last week to an averaged 5.25% this week, according to latest the results of the Primary Mortgage Market Survey® (PMMS®), released by Freddie Mac Thursday.
Survey findings:
- 30-year fixed-rate mortgage averaged 5.25 percent with an average 0.9 point as of May 19, 2022, down from last week when it averaged 5.30 percent. A year ago at this time, the 30-year FRM averaged 3.00 percent.
- 15-year fixed-rate mortgage averaged 4.43 percent with an average 0.9 point, down from last week when it averaged 4.48 percent. A year ago at this time, the 15-year FRM averaged 2.29 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.08 percent with an average 0.2 point, up from last week when it averaged 3.98 percent. A year ago at this time, the 5-year ARM averaged 2.59 percent.
What the experts are saying:
“Economic uncertainty is causing mortgage rate volatility,” said Sam Khater, Freddie Mac’s chief economist. “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years. Builders are also dealing with rising costs, meaning this posture is likely to continue.”
Senior Economist Nadia Evangelou, director of forecasting for the National Association of REALTORS®, commented, “Mortgage rates took a breather from their recent rally as investors are concerned about the economy. Following the 10-year Treasury yield trend, the 30-year fixed mortgage rate fell to 5.25% from 5.30% the previous week.
“Meanwhile, housing inventory is showing promising signs. During the spring and summer seasons, the inventory of homes for sale typically increases. This is one of the seasonality trends that are observed in the real estate market. Specifically, inventory normally increases by 9% on average in April compared to February. However, this year, inventory rose even further by 21% in April. According to NAR, the number of homes for sale rose to above one million units. While May and July are generally the two busiest listing months, more homes are expected to be available in the market in upcoming months. Thus, these additional homes may help potential buyers to find a home while mortgage rates are still historically low.”
Hannah Jones, economic data analyst at realtor.com®, commented, “The Freddie Mac fixed rate for a 30-year mortgage fell 5 basis points this week to 5.25%, the largest decrease since early March, as rates have steadily climbed this year. Federal Reserve Chair Jerome Powell continues to emphasize his commitment to a 2% inflation target, reiterating his willingness to continue raising interest rates until the goal of healthy prices is achieved. This commitment to tighter monetary policy continues to shake financial markets as investors try to determine how inflation, rising interest rates, and ongoing concerns in China and Ukraine will impact economic growth. Yields on 10-yr Treasury notes saw variability this week, surging close to 3.0% in the beginning of the week before settling below 2.9% in the second half of the week as investors looked for stability amidst the challenging incoming data. The Federal Reserve’s monetary tightening is having the intended effect of cooling housing demand, allowing the market to begin normalizing.
Record-breaking and still-rising home prices, climbing mortgage rates and low inventory continue to put pressure on home buyers. However, some hope is on the horizon as the market boasts more homes for sale year-over-year for the first time since March 2019. While this development is positive for buyers who have been waiting for their moment, it is the result of rising housing costs pushing many buyers out of the market altogether. Shoppers who are determined to find their perfect home will likely continue to utilize sizable down payments or even relocation to lock in affordable monthly payments. However, for buyers who are unable to contend with higher prices and climbing mortgage rates, still-high inflation and rental prices offer little relief.”
