Home News Mortgage rates fall slightly, but still hover above 5%

Mortgage rates fall slightly, but still hover above 5%

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According to Freddie Mac, 30-year fixed-rate mortgages averaged 5.10% for the week to April 28, down from 5.11% last week. However, it is still significantly higher than last year’s interest rate, which averaged a 30-year fixed rate of 2.98%.

“The combination of soaring home prices and soaring mortgage rates for more than 40 years is finally affecting purchase demand,” said Sam Carter, Freddie Mac’s chief economist.

Khater said future buyers are addressing the increased cost of home purchases by moving home searches away from coastal cities and looking for more affordable suburbs.

He said some buyers are switching to floating rate mortgages, where interest rates are reset after a period of time. The average five-year floating rate mortgage tracked by Freddie Mac last week was 3.78%.

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“We expect lower demand to soften the rise in house prices at a more sustainable pace later this year,” Khater said.

George Ratiu, economic research manager at Realtor.com, said last week the pace of rate hikes stagnated after a slight recession in the Treasury for a decade. US Treasuries, especially 10-year Treasuries, are the forerunners of fixed-rate mortgages. As yields on 10-year government bonds fall, so do mortgage yields.

“Investors are worried about the worsening epidemic of Covid in China and a major blockade, so the Treasury’s yields have receded,” he said. In addition, he said commodity prices were another shock from the supply chain disruptions caused by the war in Ukraine.

“Inflation is likely to run at a faster pace than expected and will continue to put pressure on mortgage rates in the medium term,” Latiu said.

Buyers retreat

There are signs that high interest rates are beginning to hurt the housing market.

According to the Mortgage Bankers Association, mortgage applications have fallen by 8.3% from last week. Mortgage applications are down 17% from a year ago, and loan refinancing applications are down 71% from this time last year.

In addition, according to the National Association of Real Estate Agents, the number of signed contracts to buy homes declined in March, the fifth straight month of decline.

However, as the number of buyers in the market decreases, home prices are expected to cool in many regions.

“The market is expected to reach peak prices early this spring, slowing up in the coming months and leveling off in the fall,” Latiu said.

“The good news is that for buyers who are dissatisfied with last year’s enthusiastic market, the shift to a more normal landscape is to choose from more homes, slow down sales, and promise better prices. It’s holding. “

Affordable housing declines

However, chilling prices do not necessarily mean lower homeownership costs.

According to the MBA, affordability for homebuyers fell in March, with median monthly mortgage payments rising 5% from $ 1,653 in February to $ 1,736.

How much house can you afford?

This usually kicks off a busy spring home buying season, says Edward Siler, MBA’s Vice President of Home Economics and Executive Director of the American Institute for Homes.

“A healthy labor market and strong wage increases nationwide demand in March, but soaring home prices and mortgage rates last month slowed purchase application activity,” he said. rice field.

According to Seiler, typical borrower principal and interest payments in March were $ 387 more than they were a year ago.

“Rapid price increases, high inflation, low inventories and mortgage rates are 2 percentage points higher than last year, all of which are headwinds for the housing market in the coming months, especially for first-time buyers. That’s what Seiler says.

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