According to Freddie Mac, 30-year fixed-rate mortgages averaged 5.10% for the week to May 26, down from 5.25% last week. It’s still well above the average of 2.95% since this time last year.
“Mortgage rates have fallen for the second straight week due to multiple headwinds facing the economy,” said Sam Carter, chief economist at Freddie Mac. “Despite the recent easing of interest rates, the housing market is clearly slowing, and the slowdown is spreading to other segments of the economy, such as consumer consumer durables.”
Buyers are finding homes at a more affordable price, as inflation has taken a larger portion of their income and the cost of renting has reduced their purchasing power. Interest rates have risen sharply since January, and housing funding costs are significantly higher for buyers.
At the end of May 2021, buyers who reduced their 20% to $ 375,500 homes and financed the rest with a 30-year fixed rate mortgage with an average interest rate of 2.95% paid a $ 1,258 mortgage of principal and interest. , According to Freddie Mac numbers.
Today, homeowners who buy an average of 5.10% of the same priced home will pay $ 1,631 per month in principal and interest. According to Freddie Mac figures, this is $ 373 more per month and cumulative interest payments during the loan period are $ 134,140 more.
Analysts expect mortgage rates to stay at these levels or rise as long as the Federal Reserve is working to stop inflation. Federal Reserve Chair Jerome Powell said central banks will continue to raise interest rates until a healthier price target is achieved.
Mortgage rates tend to track 10-year US Treasury bonds, but can also be indirectly affected by the Fed’s actions on inflation. Yields on 10-year Treasuries have fluctuated this week as investors sought stability in a series of difficult economic data.
“Investors who have participated in the stock market sale over the past five weeks have turned their attention to the bond market and priced T-bill and mortgage-backed securities,” said Joel Berner, senior economic research analyst at Realtor.com. I pushed it up. ” .. “This allowed mortgage rates to fall, even in the inflation-cooling policy initiated by the Federal Reserve.”