Mortgage rates

The 30-year fixed rate mortgage moved one basis point lower this week, remaining in the same range since it spiked in mid-April, Freddie Mac said.

Mortgage applications rose 12.5% from last week, breaking a month-long streak of decline and offering a positive note as summer approaches.

While lenders have come out with more products for the spring season, rate lock data finds buyers still hesitant to act because of high mortgage rates.

The Treasury is set to sell $22 billion of 30-year government bonds on Thursday. The results will receive special attention because they will offer an instant readout on the scope of market demand at a time when investor appetite for 30-year US debt has soured. 

Treasuries slumped after stronger-than-expected US job and wage growth prompted traders to trim bets that the Federal Reserve will cut interest rates this year. 

However, some aspects of the latest employment statistics from the Bureau of Labor Statistics point to gradual weakening in the economy.

Even with the four basis-point drop, the 30-year fixed rate mortgage remained at levels last seen in February as the Spring homebuying season reaches its climax.

Two- to 10-year yields reached the lowest levels since at least May 9 after the ISM Services gauge for last month signaled contraction for the first time since last June.

The product, as well as the housing market, is different today than what it was two decades ago, where some feel it was a cause of the financial crisis.

However, with the market continuing to shift more in favor of homebuyers, home prices should move lower, aiding affordability in the weeks ahead.

However, the 30-year fixed rate mortgage is still 14 basis points lower than it was for the same week last year, the Freddie Mac survey reported.

While more consumers claim they can't tell whether now is a good time to purchase a home, over half of prospective buyers said the market is better than it was in 2024.

The yield on 10-year benchmark Treasuries was up about three basis points following Wednesday's sale, after earlier climbing more than five basis points. 

The Mortgage Bankers Association's measure of refinancing dropped 7.1% to 634.1 in the week ended May 23.

Purchases of new single-family homes increased 11% last month to a 743,000 annual rate, the highest level since February 2022, according to government data.

The 14.3% rate for deals withdrawn in any April is the highest level other than in Covid-impacted 2020, as homebuyers reexamine the market, Redfin said.

Yields on the 10-year Treasury have been climbing because of the Moody's U.S. downgrade, the tax bill under debate in Congress and possible GSE reform.

The unexpected drop to the slowest pace in seven months was driven by ongoing affordability constraints and is a lackluster start to the Spring selling season.

Increases in gross domestic product and home sales expectations compared with April are the drivers of Fannie Mae's latest mortgage outlook for 2025 and 2026.

The Mortgage Bankers Association latest forecast reflects the industry's current views on where their business is going, said Mike Fratantoni.