Mortgage rates continued to slip over the past week, continuing a trend that has been seen over the past five weeks, according to Freddie Mac's latest Primary Mortgage Market Survey released on Thursday.
Rates, which had increased rapidly through most of the spring buying season have been on the decline and according to Sam Khater, Chief Economist at Freddie Mac, "The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels at about 20 basis points."
During the week, the 30-year fixed-rate mortgage averaged 4.52 percent down from 4.55 percent last week. The 30-year fixed-rate mortgage, however, still remains above the 3.96 percent recorded during the same period a year ago. The 15-year fixed-rate mortgage ended the week at 3.99 percent, down from 4.04 percent last week. The survey said that the five-year Treasury-indexed Hybrid Adjustable-rate Mortgage (ARM) was at 3.74 percent down from 3.87 percent.
For homebuyers, Khater said, the decline in rates was good news. "Mortgage rates may have a little more room to decline over the very short term," Khater said. "Although the current economic expansion is in its tenth year, residential single-family real estate was initially slow to recover. Now, backed by the demographic tailwind provided by millennials reaching the peak age to buy their first home, the housing market should have some room to grow going forward."
Despite the fall in mortgage rates, applications have also declined according to the latest Mortgage Applications Survey by the MBA. The Market Composite Index decreased 0.5 percent on a seasonally adjusted basis from the week earlier. According to the survey, the Purchase Index increased 1 percent, while the Refinance Index decreased 2 percent from the previous week.
The survey found that the refinance share of mortgage activity decreased to 37.2 percent of total applications while the ARM share of activity increased to 6.7 percent of total apps. Applications for FHA, VA, and USDA remained unchanged from the previous week at 10.2 percent, 10.7 percent, and 0.8 percent respectively.