Mortgage rates continued their month-long slide, according to data released late last week, giving new -- but temporary -- hope to millennial buyers struggling to piece together a down payment amid soaring home prices and lackluster wage growth.
According to the Freddie Mac survey of lenders, the 30-year fixed-rate average decreased to 4.52 percent with an average 0.5 point. Points are fees paid to a lender equal to 1 percent of the loan amount. The 30-year rate was 4.55 percent two weeks ago and 3.96 percent a year ago.
The 15-year fixed-rate average dropped to 3.99 percent with an average 0.4 point. The 15-year rate was 4.04 percent two weeks ago and 3.22 percent a year ago. The five-year adjustable rate average reached 3.74 percent with an average 0.3 point, down from 3.87 percent two weeks ago. The rate was 3.21 percent a year ago.
"The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels by about 20 basis points. What that means for buyers is good news. Mortgage rates may have a little more room to decline over the very short term," Sam Khater, Freddie Mac's chief economist, said in a statement.
"Although the current economic expansion is in its 10th year, residential single-family real estate was initially slow to recover," Khater added. "Now, backed by the demographic tailwind provided by millennials reaching the peak age to buy their first home, the housing market should have some room to grow going forward."
Lawrence Yun, chief economist at the National Association of Realtors, said that first-time buyers are paying close attention to the rate declines.
"Interest rates are very important for first-time buyers -- they don't have cash to buy a home," Yun said. "Home sales, which have been weakening the past few months, may stabilize because the [mortgage] rates are declining." He added that buyers should act quickly because "it's much more likely rates will be higher three to six months from now."
SundayMonday Business on 07/08/2018