Freddie Mac’s latest Primary Mortgage Market Survey shows that the 30-year fixed rate mortgage rate dropped below 4% for the first since January 2018.
“While economic data points to continued strength, financial sentiment is weakening with the spread between the 10-year and the 3-month Treasury bill narrowing as fears of the impact of the trade war with China grow. Lower rates should, however, give a boost to the housing market, which has been on the upswing with both existing and new home sales picking up recently,” said Sam Khater, Freddie Mac’s Chief Economist.
Danielle Hale, Chief Economist for realtor.com, echoes Khater’s sentiments and projects mortgage rates to continue falling.
“Looking forward as long as this uncertainty persists, rates are likely to trend lower, which could mean good news for summer home buyers,” Hale said. “Homes sales so far this year have lagged behind year ago levels, but with continued low rates this could turn around in the second half of the year.”
Freddie Mac reports that 30-year fixed-rate mortgage (FRM) averaged 3.99% for the week ending on May 30. Last year, the 30-year FRM average 4.56%.
Fifteen-year fixed-rate mortgages fell .5 points from last week to 3.46%, and dropped from 4.06% year-over-year.
Adjustable-rate mortgages also fell, with the new average coming in at 3.60%, which is a slight year-over-year decline from 3.80%.
The Federal Housing Finance Agency (FHFA) reported that interest rates on conventional purchase-money mortgages decreased in April, with the average interest rate on all mortgages rates falling to 4.20%.
April’s rate is a 24-point drop from March’s 4.44%.
The report adds the average contract mortgage rate for the purchase of a previously occupied home was 4.15% for loans closed in April, which is a decrease of 21 points from 4.36% in March.
The FHFA stated in a prior report that home prices rose 1.1% in Q1 2019 from Q4 2018, according to the latest Home Price Index.
“House prices have risen consistently over the last 31 quarters," said Dr. William Doerner, FHFA's Supervisory Economist. “Although price growth is still positive, the upward pace is softening across the country, especially among states with the largest supplies of housing."