The 30-year fixed-rate mortgage (FRM) averaged 6.39% this week, down slightly from last week’s bump up to 6.43%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers
- 30-year fixed-rate mortgage averaged 6.39% as of May 4, 2023, down from last week when it averaged 6.43%. A year ago at this time, the 30-year FRM averaged 5.27%.
- 15-year fixed-rate mortgage averaged 5.76%, up from last week when it averaged 5.71%. A year ago at this time, the 15-year FRM averaged 4.52%.
What the experts are saying
“This week, mortgage rates inched down slightly amid recent volatility in the banking sector and commentary from the Federal Reserve on its policy outlook,” said Sam Khater, Freddie Mac’s Chief Economist. “Spring is typically the busiest season for the residential housing market and, despite rates hovering in the mid-six% range, this year is no different. Interested homebuyers are acclimating to the current rate environment, but the lack of inventory remains a primary obstacle to affordability.”
Realtor.com economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage moved lower this week, dipping 4 basis points to 6.39% driven by economic volatility and recent bank failures. Meanwhile, the Federal Reserve Bank announced an interest rate hike of 25-basis points at its May FOMC meeting, setting the fed funds rate in the range of 5% to 5.25%, the highest since 2007. As the Fed’s decision was well anticipated, the rate hike is unlikely to cause significant changes in mortgage and other interest rates. The higher rates will continue to slow economic growth toward the target rate of 2%. However, as the impacts of earlier rate increases continue to work through the economy and the recent bank failures reveal the impact of higher rates, there is a risk of the U.S. economy entering a recession. Although markets are more focused on whether the rate hikes have concluded, the Federal Reserve did not provide a definitive forward guidance in the meeting and continues to leave the door open to various scenarios.
“The housing market is moving slower this spring. In a typical year, we would expect to see the number of homes for sale begin to increase more significantly from this point forward. However, mortgage rates remain elevated, leading many sellers to report feeling “locked in” by their current low mortgage rate and planning to wait until rates come down before selling, leading to fewer newly listed homes than a year ago.
“Meanwhile, buyers are facing frustration due to the limited options available on the market and are increasingly turning to newly constructed homes. In addition, starting May 1st, the Federal Housing Finance Agency (FHFA)’s new loan-level price adjustments (LLPAs) could further complicate things for middle-class buyers who typically have high credit scores. According to this new policy, well-qualified borrowers with scores ranging from 680 to above 780 may need to pay slightly more than before to offset the reduction in fees charged to buyers with low credit scores.”
