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Freddie Mac’s weekly Primary Mortgage Market Survey report released Thursday shows that fixed mortgage rates averaged 5.13%, leading to an expectation that purchase demand will likely continue to drag over the rest of the year and home price growth will decelerate.
“Inflation appears to be beyond its peak, which has stopped the rapid increase in mortgage rates that the housing market was experiencing earlier this year,” said Sam Khater, Freddie Mac chief economist. “The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability.
According to the report:
- 30-year fixed-rate mortgages averaged 5.13% with an average 0.8 point as of Aug. 18, down from last week when it averaged 5.22%. A year ago at this time, the 30-year FRM averaged 2.86%.
- 15-year fixed-rate mortgages averaged 4.55% with an average 0.7 point, down from last week when it averaged 4.59%. A year ago at this time, the 15-year FRM averaged 2.16%.
- 5-year Treasury-indexed fixed-rate mortgages (ARM) averaged 4.39% with an average 0.3 point, down from last week when it averaged 4.43%. A year ago at this time, the 5-year ARM averaged 2.43%.
The survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.
George Ratiu, Realtor.com manager of economic research, said Thursday that mortgage rates are mirroring the zigzag movement of the 10-year Treasury, as capital markets react to the positive economic numbers, while under the shadow of two quarters of negative GDP growth. “July’s retail sales data showed resilient consumer spending, despite the highest inflation seen in four decades,” Ratiu said.
Ratiu said that for real estate markets, late summer spotlights a tentative transition toward a post-pandemic normal. Based on Realtor.com’s weekly data, many homeowners are pulling back from selling their homes, concerned about missing the pricing peak, especially as the share of listed homes with price reductions gains ground.
“After picking up in the last couple of months, new listings are retreating, slowing the rebalancing process,” he said. However, the shift toward a calmer market continues, highlighted by the further moderation in price gains which made a noticeable move toward single-digit territory last week.”
Ratiu noted that for today’s buyers, housing affordability is a critical challenge.
“At today’s 30-year fixed rate, the buyer of a median-priced home is looking at approximately $2,000 for a monthly payment, a 53% jump from a year ago,” he said. “With wages rising at an average of 5.3% year-over-year, many Americans looking to buy a home are finding that goal slipping farther away.”
Zillow Vice President of Capital Markets Paul Thomas said Thursday that “inflation data released last week came in below market expectations, resulting in interest rate declines and a rally in equity markets. Investors viewed this data as an indication that the Federal Reserve may not have to increase short term rates as much as previously estimated.”