Mortgage rates slipped during the week ending May 31 for the first time in four weeks after climbing to their highest level in more than seven years, according to the Primary Mortgage Market Survey released by Freddie Mac.
Rates for the 30-year fixed-rate mortgage averaged 4.56%, with an average 0.4 point, down from the previous average of 4.66%. The latest average marked a year-over-year increase from 3.94%.
The 15-year fixed-rate mortgage averaged 4.06%, with an average 0.4 point, down from 4.15%. A year ago at this time, the mortgage averaged 3.19%.
The average rate for the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) dropped to 3.8%, with an average 0.3 point, from the previous average of 3.87%. The new average continues to be higher from the year-ago average of 3.11%.
Freddie Mac Chief Economist Sam Khater said the drop in mortgage rate came as long-term Treasury yields suddenly decreased due to recent trade and geopolitical issues. Despite volatility in the market, American consumers remained confident and kept purchase mortgage applications trending higher from a year ago.
Despite affordability challenging continuing to pressure the budgets of would-be buyers, Khater expects overall demand to stay strong heading into the summer months. His outlook reflects expectations that job growth and the overall economy remain at healthy levels.
“Extremely low inventory conditions in most markets are preventing sales from breaking out, while also keeping price growth elevated,” Khater said. “Even if rates climb closer to 5%, sales have room to grow more, but only if current supply levels start increasing more meaningfully.”
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