Mortgage rates tumbled last week after a
The 30-year fixed-rate mortgage average came in at 5.3%, dropping 40 basis points for the seven-day period ending July 6, according to Freddie Mac’s Primary Mortgage Market Survey.
“Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise,” Freddie Mac Chief Economist Sam Khater said in a press release.
Data releases over the past several days fueled the sudden reversal, as slower-than-anticipated growth in consumer spending and manufacturing impacted markets, according to Paul Thomas, vice president of capital markets at Zillow.
The economic news led equities to decline and bond markets to rally, bringing the 10-year Treasury yield below 3% for the first time since early June. Mortgage rates frequently move in tandem with Treasury yields.
Following the announcement last month that the Federal Reserve would
“Investors are pricing in more risk of economic slowdown and a potential recession, which may slow the pace of future interest rate hikes at the Federal Reserve,” Thomas said in a statement.
The latest mortgage-rate movements won’t necessarily turn around current lending trends, though, Khater said, as
“While the drop provides minor relief to buyers, the housing market will continue to normalize if home-price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” he said.
The 15-year and adjustable-mortgage rates also had similarly steep declines over the past week, according to Freddie Mac. The average 15-year rate was down by 38 basis points from the previous week, falling to 4.45% from 4.83%. One year ago, the 15-year rate averaged 2.2%.
The 5-year Treasury-indexed hybrid adjustable rate finished 31 basis points lower after four straight weeks of increases, coming in at 4.19%. One week prior, the 5-year ARM averaged 4.5%, and during the same week last year it came in at 2.52%.