Mortgage rates drop for the first time in four weeks
Mortgage rates dipped after four weeks of increases, finally mirroring the drop in the benchmark 10-year Treasury yield, according to Freddie Mac.
|30-Year FRM||15-Year FRM||5/1-Year ARM|
|Fees & Points||0.5||0.4||0.4|
"Slightly weaker inflation and labor economic data caused mortgage rates to dip this week," Sam Khater, Freddie Mac's chief economist, said in a press release.
Between April 22 and May 1, the 10-year Treasury yield fell by 9 basis points to close at 2.5%, although after the Federal Open Market Committee announcement it was as low as 2.45%. It rose nearly 4 basis points by 10:50 a.m. the following morning to 2.54%.
Even though the initial reaction to the first-quarter gross domestic product data by investors was positive, this and other economic indicators "were counterbalanced by reports that fell short of expectations — consumer spending results were disappointing and inflation figures were muted once again," Matthew Speakman, an economic analyst at Zillow, said when that company released its rate tracker.
"As a result, bond yields — and mortgage rates — spent much of the week oscillating within a narrow band."
The 30-year fixed-rate mortgage averaged 4.14% for the week ending May 2, down from last week when it averaged 4.2%, Freddie Mac said. Over the four week period, the 30-year FRM increased 12 basis points.
A year ago at this time, the 30-year fixed-rate mortgage averaged 4.55%. "Moving into summer, we expect rates to be about a quarter to half a percentage point lower than where they were last year, which is good news for the housing market," Khater said. "These lower rates combined with solid economic growth, low inflation and rebounding consumer confidence should provide a solid foundation for home sales to continue to improve over the next couple of months."
The 15-year fixed-rate mortgage this week averaged 3.6%, down from last week when it averaged 3.64%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.03%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.68% with an average 0.4 point, down from last week when it averaged 3.77%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.69%.
"But this downward shift in mortgage rates will likely rebound, as Treasurys rose following the culmination of April's Federal Open Market Committee meeting in which Fed Chairman [Jerome] Powell, citing strong economic fundamentals but still lagging inflation, suggested that neither a rate hike nor a rate cut would be necessary for the immediate future," Speakman said. "With the April jobs report due on May 3, noteworthy rate movements may be on the horizon, but without a meaningful uptick in inflation figures the odds of this are slim."