Mortgage rates at lowest in three spring purchase seasons

Mortgage rates ended the week 7 basis points lower, as borrowers took advantage of a brief dip in the 10-year Treasury yield, Freddie Mac found.

The 30-year fixed rate mortgage averaged 6.23% as of April 23, versus 6.3% seven days prior and 6.81% for the same week last year, its Primary Mortgage Market Survey reported.

Data for the survey now comes from applications submitted to its Loan Product Advisor automated underwriting system.

"Rates currently stand at their lowest level in the last three spring homebuying seasons," Sam Khater, Freddie Mac's chief economist, said in a press release. "This improvement, coupled with a pickup in purchase applications and refinance activity, as well as an increase in monthly pending home sales, underscores signs of improving momentum in the market."

When rates move too quickly in either direction, consumers tend to pause, said Kyle Bass, production business manager at Refi.com, in a statement in response to the Freddie Mac report. Still, "after a stretch of volatility, even a modest move lower can start to restore a sense of stability in the market, which plays a big role in how borrowers make decisions," Bass said.

"What matters right now isn't just the level of rates, but whether they begin to feel more predictable."

What other mortgage rate trackers show

However, a timelier tracker, Lender Price data posted on the National Mortgage News website, had the 30-year at 6.42%, 3 basis points higher than seven days prior.

Another product and pricing engine provider, Optimal Blue, reported the conforming 30-year FRM at 6.237% as of Wednesday. On Friday it had fallen to 6.187%, its lowest since March 17.

The Freddie Mac PMMS reported the 15-year FRM averaged 5.58%, down from last week when it was 5.65%. A year ago this product averaged 5.94%.

It was another week where the 10-year Treasury yield had a large drop of 6 basis points on April 17 to 4.25% from 4.31% on hopes the Iran conflict would soon be resolved.

But as the negotiations did not pan out, by Tuesday, it was back up to 4.29%, a level it was at on Thursday morning.

Will lower rates revive the spring housing market?

The daily ups and downs in mortgage rates, according to NerdWallet's rate tracker, netted out to drive them lower.

But this may not be enough to revive what has become a moribund spring housing market, said its home and mortgage expert Kate Wood.

"Uncertainty about the situation overseas has soured consumer sentiment on the home front," Wood said in a Wednesday statement. "Folks who can't see an end to rising prices for basics like food and fuel are likely to hesitate around the massive financial commitment of buying a home."

It would take a clear and definite resolution in Iran to begin to shift potential buyers' attitudes. "But any significant new development in the conflict — positive or negative — could give mortgage rates solid momentum," Wood suggested.

The Mortgage Bankers Association's Weekly Application Survey, released Wednesday, found conforming mortgage rates dropped 7 basis points to 6.35%. This drove up total application volume by 7.9% from the previous week seasonally adjusted, with a 10% rise in purchase activity.

"Lower mortgage rates last week, driven in part by the ceasefire in the Middle East, supported weekly and annual gains in both refinance and purchase activity, with purchase applications up 14% from a year ago," said Bob Broeksmit, MBA's president and CEO in a Thursday morning commentary.

"While geopolitical risks and uncertainty remain, a resilient labor market and increased inventory are supporting homebuyer demand."

This week's drop in rates is "a welcome tailwind," said Lisa Sturtevant, chief economist at Bright MLS in a statement in response to the Freddie Mac report. But the housing market is now facing "a growing set of headwinds."

While inventory is improving, "higher inflation and economic uncertainty are serious concerns, which is reflected in the record low consumer sentiment reported by the University of Michigan earlier this month," Sturtevant said.

Mortgage rates are likely to remain volatile this spring, she continued, with homebuyers remaining sensitive to fluctuations.

"For the market to regain full momentum, we will need to see more than just a temporary dip in rates," Sturtevant said. "Rather, we need sustained stability in the global energy market and a clearer sign that domestic inflation is back on a downward trajectory."