Some small relief was in sight for home buyers as mortgage rates eased from the 7-year high they touched earlier in May.
Rates for home loans ticked down after throttling to their highest in more than seven years as investors piled into safe-haven assets.
The 30-year fixed-rate mortgage averaged 4.56% during the May 31 week, down 10 basis points, Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 4.06%, down from 4.15%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.80%, down seven basis points.
Mortgage rates move alongside the benchmark 10-year U.S. Treasury noteTMUBMUSD10Y, +1.05% , which has rallied as fears of a eurozone breakup have resurfaced. When investors pile into safe-haven assets, it sends their prices higher and yields lower.
It was the biggest weekly move for the 30-year fixed-rate mortgage since April 26.
While mortgage rates have been higher nearly every week of this year compared with 2017, that hasn’t dented demand for home loans. The Mortgage Bankers Association’s weekly index, shown in the chart above, demonstrates how applications for purchase — not refinance — mortgages have held tough.
That may be in part because rates haven’t gone high enough to make much of a difference to many home buyers. The difference between the principal and interest payment for a 30-year fixed-rate mortgage on a typical $400,000 home at the average rates prevailing last year at this time was $1,517.00, according to Realtor.com’s mortgage calculator.This week, with rates 62 basis points higher, that same monthly payment would be $1,633 — $116 more.
News Corp, the owner of MarketWatch, owns and operates Realtor.com under license from the National Association of Realtors.
Freddie Mac’s chief economist, Sam Khater, said that continued demand comes thanks to “confident American consumers,” but housing industry participants worry that the lopsided supply-demand dynamics of the housing market, coupled with rising rates, may take ownership out of reach of many would-be buyers.