Mortgage rates stable, aiding purchase business

Mortgage rates remained generally steady this past week, even with the continuing market volatility, and that is helping the purchase market, according to Freddie Mac.

"Mortgage rates have stabilized at very low levels over the last few weeks as homebuyer demand slowly improves," Sam Khater, Freddie Mac's chief economist, said in a press release. "Although purchase applications reached a new low in mid-April, today purchase demand is only down 10% from one year ago. While demand is improving, inventory is low and declining with no signs of a turnaround yet."

Zillow's rate tracker, based on offers made through its site, were lower for the seven-day period ended on May 13.

"Contributing to the decline in rates, which fell sharply on Wednesday, were comments made by Federal Reserve Chair Jerome Powell, in which he offered a more pessimistic economic outlook and shed light on the risks posed by drawn-out recessions," said Zillow economist Matthew Speakman in an accompanying statement. "The gloomy remarks led investors to seek out the safety of Treasuries, movements that generally push mortgage rates lower."

The 30-year fixed-rate mortgage averaged 3.28% for the week ending May 14, up slightly from last week when it averaged 3.26%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.07%.

The 15-year fixed-rate mortgage averaged 2.72%, down slightly from last week when it averaged 2.73%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.53%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% with an average 0.3 point, up slightly from last week when it averaged 3.17%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.66%.

"The market remains very tight for borrowers with less-than-excellent credit, or for those looking for atypical loans," Speakman said. "However, the general improvement is a welcome sign for the housing market that has been showing other signs of stability in recent weeks, despite a slew of devastating data emerging from elsewhere throughout the economy.

"The combination of ongoing uncertainty and stabilization in some parts of the market suggest that average rates are likely to remain low, but rates associated with riskier mortgages are unlikely to fall much."