"There are still potential homebuyers on the sidelines waiting to jump back into the market"
Mortgage rates continue to fluctuate, with the average 30-year fixed-rate home loan swinging back up to 5.55% as the once-robust housing market weakens.
The long-term mortgage rate jumped 42 basis points from last week to a two-month high of 5.55%, according to Freddie Mac’s Primary Mortgage Market Survey. A year ago, at this time, the 30-year mortgage was 2.87%.
The 15-year fixed-rate mortgage rose to 4.85%, up 35 basis points from the previous week and from 2.87% at this time in 2021. Meanwhile, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.36%, down from 4.39% last week and more than two percentage points higher than the 2.42% average a year ago.
“The combination of higher mortgage rates and the slowdown in economic growth is weighing on the housing market,” said Sam Khater, Freddie Mac’s chief economist. “Home sales continue to decline, prices are moderating, and consumer confidence is low. But, amid waning demand, there are still potential homebuyers on the sidelines waiting to jump back into the market.”
Mortgage applications for the week ending August 19 dwindled 1.2% week over week on a seasonally adjusted basis, according to the Mortgage Bankers Association. Refinance application activity was down 3%, and purchase application volume dropped 1% from the prior week.
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“Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Last week’s purchase results varied, with conventional applications declining 2% and government applications increasing 4%, which is potentially a sign of more first-time homebuyer activity.”
