The 30-year fixed-rate mortgage (FRM) averaged 4.99%, dropping below 5% for the first time since April, according to the Primary Mortgage Market Survey® (PMMS®), released by Freddie Mac Thursday.
Key findings:
- 30-year fixed-rate mortgage averaged 4.99% with an average 0.8 point as of August 4, 2022, down from last week when it averaged 5.30%. A year ago at this time, the 30-year FRM averaged 2.77%.
- 15-year fixed-rate mortgage averaged 4.26% with an average 0.6 point, down from last week when it averaged 4.58%. A year ago at this time, the 15-year FRM averaged 2.10%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.25% with an average 0.3 point, down from last week when it averaged 4.29%. A year ago at this time, the 5-year ARM averaged 2.40%.
What the experts are saying:
“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth,” said Sam Khater, Freddie Mac’s chief economist. “The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, especially as the Federal Reserve attempts to navigate the current economic environment.”
Bright MLS Chief Economist Dr. Lisa Sturtevant, commented, “Mortgage rates continue their bumpy ride amidst growing economic uncertainty. Lower rates have not pulled people back into the housing market in any significant numbers. Despite the dip in mortgage rates, data on new purchase contract activity indicate that many buyers are remaining on the sidelines. Mortgage applications have inched up slightly. But other data, including data on showings and public views of properties, indicate that buyer activity remains restrained, despite the lower movement on rates.
The overall housing market is resetting to a new equilibrium. While mortgage rates will always be a consideration for buyers, other factors drive the decision to buy a home. High inflation continues to take a bite out of families’ budgets, making it harder to save for a down payment. Credit card balances are on the rise, impacting debt-to-income ratios. And general economic uncertainty and pandemic fatigue have caused many people to pause their home search.
“Mortgage rates will likely continue to fluctuate in the near-term. The Fed will raise short-term rates again in the coming months to attempt to bring inflation under control. The impact on mortgage rates will depend on how successful the Fed is in bringing down inflation without triggering a slowdown in the labor market,” Sturtevant said.
“The Freddie Mac fixed rate for a 30-year loan continued on a downward trend this week, sliding below the 5.0% threshold, to 4.99%. A raft of surprisingly positive economic indicators counterbalanced the drumbeat of recessionary chatter: factory orders outpaced market expectations, as did the ISM service sector data,” said George Ratiu, senior economist and manager of economic research at realtor.com®. “However, the number of job openings softened, even as the labor market remained tight. Capital markets are seeking a stronger directional signal about economic activity amid the push-and-pull of consumer spending and business investments. While underlying economic conditions show resilience, the recession narrative is playing an important role in market psychology and investor expectations, as we see the sharp upward push in rates moderate more visibly.
“For housing, the combination of high prices and higher interest rates is driving a reset in fundamentals. With borrowing costs setting an affordability ceiling for many buyers, home sales are dropping. In addition, as many homeowners rushed into summer ready to list their property and capture the equity brought about by record-high prices, inventory has improved. This brought a welcome sign in this year’s real estate markets—price cuts. However, realtor.com®’s most recent weekly data show that some homeowners may feel that they missed the market’s peak and are holding back on listing. As the number of new listings softens, it raises the concern that the nascent improvement in inventory may prove elusive as we approach the latter stages of summer,” Ratiu concluded.
