Freddie Mac is reporting that mortgage rates this week dipped below the 3% mark, as the 30-year fixed-rate mortgage (FRM) averaged 2.98%, down from last week when it averaged 3.02%. A year ago at this time, the 30-year FRM stood at 3.07%.
“Economic growth remains steady and is bolstering more segments of the economy,” said Sam Khater, Freddie Mac’s Chief Economist. “Although low and stable mortgage rates have kept the housing market booming over recent months, a deterioration in affordability and for-sale inventory has led to a market slowdown.”
Also this week, the 15-year FRM averaged 2.26%, with an average 0.7 point, down from last week when it averaged 2.34%. A year ago at this time, the 15-year FRM averaged 2.56%.
As Khater noted, affordability remains a hurdle for many would-be buyers, as Realtor.com reported in its Monthly Housing Report for June 2021, that median home prices broke a new record for the fifth consecutive month hitting $385,000.
Realtor.com also noted that housing inventory was down 43.1% year-over-year, with 415,000 fewer homes available for sale on a typical day in June, compared to the same time last year.
The drop in rates below 3% this week marked a return to sub-3% levels, as last week was the first time in 10 weeks that rates exceeded the mark.
The Mortgage Bankers Association (MBA) reported earlier this week a slip in both purchase applications and refi applications. Overall mortgage application volume dropped 6.9% over the previous week, while the share of refi applications dropped slightly to 61.9% of total application volume, down from a share of 62.5% the previous week.
Despite the drop in mortgage apps, signs of economic improvement continue, as the U.S. Department of Labor reported that 51,000 less unemployment claims were filed for the week ending June 26. This brings unemployment claims to 364,000 nationwide, the lowest level for initial claims since the outset of the pandemic on March 14, 2020 when it was 256,000.
Freddie Mac also reported the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaging 2.54% with an average 0.3 point this week, up slightly from last week when it averaged 2.53%. A year ago at this time, the five-year ARM averaged 3%.