Freddie Mac (OTCQB: FMCC) on Thursday reported that its Primary Mortgage Market Survey (PMMS) shows that, after climbing to their highest level in over seven years, mortgage rates fell over the past week.
Sam Khater, Freddie Mac’s chief economist, said the 30-year fixed-rate mortgage fell 10 basis points to 4.56%. “The decline was driven by recent trade and geopolitical issues, which led to a sudden decrease in long-term Treasury yields,” he said. “Meanwhile, confident American consumers shrugged off the market volatility, as purchase mortgage applications continued to trend higher from a year ago.”
Heading into the summer months, Khater said he anticipates that even as affordability pressures continue to put strain on the budget of some would-be buyers, demand overall should stay strong as long as job growth and the overall economy keep running at healthy levels. This month’s forecast – released last week – calls for new and existing sales to increase around 3% in 2018.
“Extremely low inventory conditions in most markets are preventing sales from breaking out, while also keeping price growth elevated,” said Khater. “Even if rates climb closer to 5%, sales have room to grow more, but only if current supply levels start increasing more meaningfully.”
The PMMS reports:
· 30-year fixed-rate mortgage (FRM) averaged 4.56% with an average 0.4 point for the week ending May 31, 2018, down from last week when it averaged 4.66%. A year ago at this time, the 30-year FRM averaged 3.94%.
· 15-year FRM this week averaged 4.06% with an average 0.4 point, down from last week when it averaged 4.15%. A year ago at this time, the 15-year FRM averaged 3.19%.
· 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.80% this week with an average 0.3 point, down from last week when it averaged 3.87%. A year ago at this time, the 5-year ARM averaged 3.11%.
