Average mortgage rates see modest decline as 10-year yields slip

Mortgage rates dipped slightly over the past week as yields on the 10-year Treasury retreated after breaking the 3% barrier, according to Freddie Mac.

The 30-year fixed-rate mortgage averaged 4.55%, down from last week when it averaged 4.58%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.02%.

Yields on the benchmark 10-year Treasury broke 3% on April 25, but retreated the next day. They have remained under 3% except for a brief period in overnight trading on May 2.

"While mortgage rates have increased by one-half of a percentage point so far this year, it has not impacted home purchase demand, which continues to grow this spring," Sam Khater, Freddie Mac's chief economist, said in a press release. "The observed buyer resiliency in the face of higher rates reflects the healthy economy and strong consumer confidence, which are important drivers of home sales activity."

"It's also good news that first-time buyers appear to be having more success so far this year — despite higher borrowing costs and home prices. Our data through April show that first-timers represent 46% of purchase loans, up from 43% over the same period a year ago," Khater said.

The 15-year fixed-rate mortgage this week averaged 4.03%, up from last week when it averaged 4.02%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.27%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.69% this week with an average 0.3 point, down from last week when it averaged 3.74%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.13%.

"Mortgage rates retreated late last week as incoming economic data continue to point to a tight labor market and upward momentum in inflation and wages — two key signals that the Federal Reserve has been looking for in setting interest rates," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on May 2.

"This week all eyes will be Friday's jobs report — particularly on the wage growth numbers. A strong report would reinforce expectations for a faster pace of interest rate hikes ahead," Terrazas said.