Mortgage Rates in Decline, but Still Up From Last Year

Home mortgage rates slipped lower again last week, nearing 5 percent, after some economic reports released this week hinted that inflation may have reached its peak.

Specifically, the 30-year fixed-rate mortgage fell to, on average, 5.13 percent (for the week ending Aug 18). It was 5.22 percent the preceding week, according to data from Freddie Mac. Of course, even as the decline continues, this is still nowhere near the same metric from last year, with the 30-year fixed-rate mortgage was 2.86 percent.

The same is true for 15-year mortgage rates, which is 4.55 percent. This is down from 4.59 percent last month. But, in parallel with the 30-year, the decline still does not approach the same rate from the same period last year, which was 2.16 percent.

As a matter of fact, the latest rate is neither near the average mortgage rate from the top of the year, when it was 3.22 percent. From there, mortgage rates quickly escalated to 5.81 percent in the first half of the year; so it is a welcome sign to see rates slowly ticking down. Obviously, economic concerns have been significantly higher this year, as the Federal Reserve bank attempts to combat inflation, making rates more volatile.

According to Freddie Mac chief economist Sam Khater, “Inflation appears to be beyond its peak,” and this, he says, has stopped slowed what has been an otherwise rapid increase in home mortgage rates that the US housing market had been experiencing early in the year.

Again, while things are looking better, mortgage rates are still up more than two percentage points from the same period last year. These higher percentage translate to an increase of about $700 in monthly payments on a 30-year loan.

Khater goes on to say, “The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability.” He adds that this will result in slower demand as the year continues, which will eventually lead to a modest supply increase. As supply increases, of course, this should decelerate home price growth.