Mortgage rates experienced a slight decline this week following a month-long upward trend, triggering an uptick in purchase applications within a housing market that has largely stagnated for months amidst soaring home prices and consistently elevated rates.
According to Freddie Mac’s latest Primary Mortgage Market Survey released on Thursday, the average rate on the benchmark 30-year fixed mortgage dipped to 6.88% this week, down from 6.94% the previous week. A year ago, the average rate for a 30-year loan stood at 6.73%.
Similarly, the average rate for a 15-year fixed mortgage also saw a modest decrease to 6.22%, compared to 6.26% reported last week. One year ago, the rate for a 15-year fixed note averaged 5.95%.
Sam Khater, Freddie Mac’s chief economist, remarked, “Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates.”
“Mortgage rates continue to be one of the biggest hurdles for potential homebuyers looking to enter the market,” Khater added.
In line with this trend, the Mortgage Bankers Association reported on Wednesday a nearly 10% surge in mortgage applications driven by the decline in rates, with FHA purchase applications witnessing a notable 16% increase.
However, despite the decline in rates, which still linger in the high 6% range, many prospective buyers and sellers—predominantly those locked in at rates below 5%—are adopting a cautious stance, awaiting further decreases in mortgage rates before initiating any transactions.
Simultaneously, the housing market grapples with all-time high home prices amid a scarcity of available homes, exacerbating the ongoing affordability crisis in the housing sector.
