For much of this year, mortgage rates had been steadily climbing, reaching levels not seen in more than a decade. But these past few weeks have offered a bit of a reprieve.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average dropped to its lowest level in five weeks, falling to 5.1% with an average 0.9 point. (A point is a fee paid to a lender equal to 1 percent of the loan amount. It is in addition to the interest rate.) It was 5.25% a week ago and 2.95 percent a year ago.
Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.
The 15-year fixed-rate average slid to 4.31% with an average 0.8 point. It was 4.43% a week ago and 2.27% a year ago. The five-year adjustable rate average rose to 4.2% with an average 0.3 point. It was 4.08% a week ago and 2.59% a year ago.
"The Freddie Mac fixed rate for a 30-year mortgage fell for the second week in a row, following Tuesday morning's sharp dip in the 10-year Treasury," Joel Berner, senior economic research analyst at Realtor.com, wrote in an email. "Yields quickly fell 14 basis points from the day's open and have hovered around 2.75 percent since. Investors taking part in the stock market sell-off of the past five weeks have shifted their attention to the debt market, driving up prices on T-bills and mortgage-backed securities. This allowed mortgage rates to fall, even amid inflation-cooling policies initiated by the Federal Reserve."
Mortgage rates have skyrocketed this year, outracing expectations. The 30-year fixed average went from 3.22 percent at the start of the year to 5.3 percent earlier this month, the fastest gain since 1994, according to Freddie Mac.
With inflation running at 40-year highs, the Federal Reserve's aggressive moves to rein it in have put upward pressure on mortgage rates. Earlier this month, the central bank raised its federal funds rate by a half-percentage point, the sharpest increase since 2000. The Fed's minutes from that meeting, which were released this week, indicate two more hikes of a half-percentage point each are expected when it meets in June and July.