For the third straight week, the 30-year, fixed-rate mortgage (FRM) fell over the previous week, as Freddie Mac reported the FRM averaging 6.32% as of March 30, 2023, down from last week when it averaged 6.42%. A year ago at this time, the 30-year FRM averaged 4.67%.
And with the steady decline in mortgage rates came yet another overall rise in mortgage application volume, as the Mortgage Bankers Association (MBA) reported a 2.9% week-over-week rise in mortgage application volume, marking the fourth straight week of an uptick.
“Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers,” said Sam Khater, Freddie Mac’s Chief Economist.
Also this week, Freddie Mac reported the 15-year FRM averaged 5.56%, down from last week when it averaged 5.68%. A year ago at this time, the 15-year FRM averaged 3.83%.
“As the dust settled after last week’s FOMC meeting, markets adjusted to the short- and long-term implications of higher interest rates and the possibility of stricter lending requirements, along with a possible end to rate hikes on the horizon,” noted Realtor.com Economic Research Analyst Hannah Jones. “These factors create a less hospitable borrowing environment, which would serve to bring inflation closer to a healthy level. More expensive, stricter lending helps to usher in the long-term health of the economy, but the downside is that borrowing for large purchases, including a home purchase, may be relatively more challenging in the short term.”
According to Realtor.com’s analysis of March data, the inventory of homes for sale continued to grow higher than in 2022, but the pace of growth declined slightly, and inventory remained constrained compared to pre-pandemic levels.
And while the healthy combo of a rise in sales and slide in rates have benefited buyers nationwide, supply issues remain a hurdle to total rebalance of the nation’s housing marketplace. Realtor.com reports that there were 59.9% more homes for sale in March 2023, compared to the same time in 2022, which means that there were 211,000 more homes available to buy this past month compared to one year ago. The growth rate in inventory began to slow slightly, as fewer potential sellers opted to list their home for sale, meaning there were still fewer homes available to buy on a typical day in March than there were a few years ago.
“The mortgage market has seen a partial revival in March, with the recent decline in mortgage rates boosting borrower demand,” said MBA President and CEO Bob Broeksmit. “While still below year-ago levels, applications for home purchases and refinances both have increased for four consecutive weeks. New and existing supply is still low, but lower mortgage rates and slower home-price growth have improved buyers’ purchasing power this spring.”