After climbing to their highest level in more than seven years, mortgage rates eased a bit this week. It was the first time they declined in four weeks, says Sam Khater, Freddie Mac’s chief economist. The 30-year fixed-rate mortgage fell 10 basis points to a 4.56 percent average this week.
“The decline was driven by recent trade and geopolitical issues, which led to a sudden decrease in long-term Treasury yields,” Khater says. “Meanwhile, confident American consumers shrugged off the market volatility, as purchase mortgage applications continue to trend higher from a year ago.”
But even with higher rates this year, Khater believes demand from home buyers will stay elevated as long as job growth and other economic fundamentals stay strong.
“Extremely low inventory conditions in most markets are preventing sales from breaking out while also keeping price growth elevated,” Khater says. “Even if rates climb closer to 5 percent, sales have room to grow more—but only if current supply levels start increasing more meaningfully.”
Freddie Mac reports the following national averages with mortgage rates for the week ending May 31:
- 30-year fixed-rate mortgages: averaged 4.56 percent, with an average 0.4 point, down from last week’s 4.66 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
- 15-year fixed-rate mortgages: averaged 4.06 percent, with an average 0.4 point, dropping from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.19 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 3.80 percent, with an average 0.3 point, dropping from last week’s 3.87 percent average. A year ago, 5-year ARMs averaged 3.11 percent.
Source: Freddie Mac