U.S. mortgage rates have fallen at the fastest pace since 2008 last week, as economic concerns in bond markets are fueled by housing loans at a time when housing costs are rising. in historical highs.
The average interest rate charged on a 30-year fixed-rate mortgage fell for the second consecutive week to 5.3%, compared to 5.7% the previous week, Freddie Mac said on Thursday. government-backed housing loan agency.
The fall partially reverses a rapid and sharp rise in mortgage rates this year that has followed the Federal Reserve’s aggressive campaign to fight inflation by raising benchmark interest rates. A year ago, mortgage rates averaged 2.9 percent.
Higher mortgage rates have increased pressures on home buyers as reduced supply raises prices. The average home price in the U.S. in May rose above $ 400,000 for the first time, up 14.8 percent from a year earlier, according to the National Association of Realtors.
“While [mortgage rate] The fall provides less relief to buyers, the housing market will continue to normalize if housing price growth slows materially due to the combination of low affordability of housing and expected economic slowdown said Sam Khater, chief economist at Freddie Mac.
Mortgage rates are closely following movements in Treasury bond yields. The yield on the 10-year Treasury note peaked at nearly 3.5 percent in June, its highest level since 2011. It has since fallen about 0.5 percentage points and is now trading below of 3 percent, reflecting concern that the Fed’s monetary tightening could lead to slower growth or a recession.
Mortgage applications fell 5.4 percent last week from the previous week, according to the Association of Mortgage Bankers.
“Purchasing activity is limited by ongoing affordability challenges and low inventory, and homeowners still have a reduced incentive to apply for refinancing,” said Joel Kan, associate vice president of economic forecasting and industry. of the MBA.
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According to Black Knight, a real estate data company, annual housing price growth slowed in May. The slowdown was the largest since 2006, near the peak of the subprime real estate bubble in the United States.
“While any talk about home values and 2006 could sound the alarm for some, the truth is that price gains should see a slowdown at this rate for more than 12 months only to return. us at a “normal” 3-5 percent annual growth rate, ”said Ben Graboske, president of data and analysis at Black Knight.