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Mortgage Rates Drop for Second Week in a Row

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Mortgage rates have begun to fall recently as they show signs that the hot US housing market is starting to cool.


Photo:

The Wall Street Journal’s Chona Kasinger

Mortgage rates have begun to decline after reaching invisible levels for over a decade.

30-year fixed-rate mortgage average interest rate fell to 5.10% for the second straight week, mortgage finance giant

Freddie Mac

Said Thursday after the most surge in decades. The rate peaked at 5.3% in early May, the highest level since 2009, well above the previous year’s 2.94% average.

Mortgage rates are declining as the heated housing market shows signs of starting to cool. According to the National Association of Real Estate Agents, sales of pending homes in April fell 3.9% from March.Sale of existing homes Dropped to the lowest level since June 2020 During April.

Recent declines in interest rates could provide relief to Americans struggling to buy a home in the current market where demand far exceeds supply.

Higher rates helped facilitate mortgage payments Over $ 300 in 2022, According to the Federal Reserve Bank of Atlanta. The median American household needed 38.6% of its income to cover the median home payments for March. This is up from 32.6% at the end of 2021 and is the highest level since August 2007.

“The flat mortgage rates are a lifeline for future homebuyers who are already dealing with inflation and record high list prices,” said Joel Berner, a senior research analyst at Realtor.com. This is welcome news for the entire housing market. ”

Mortgage rates soared first with the withdrawal of the Federal Reserve from the mortgage market earlier this year. Interest rates continued to rise based on the expectation that the Fed would continue to raise short-term interest rates throughout the year.

U.S. Treasury Yields It fell from the highest price in recent yearsDriven by the investor’s escape from volatile stock markets to safe government debt. This has removed some of the upward pressure on mortgage rates. This is closely related to the yield of benchmark notes.

With the 30-year average mortgage rate rising to 5%, millions of Americans may no longer be able to get their own homes. WSJ’s Dion Rabouin describes the potential buyers, sellers and impacts on the housing market.Illustration: Adele Morgan

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