The 30-year fixed mortgage rate has returned to the level observed in early April.
Mortgages and refinance applications have increased over the past week as funding has eased and housing activities stimulated amid growing economic uncertainty.
The increase in home buying activity was partly driven by a slippery decline in mortgage rates.
The 30-year mortgage rate has dropped by 6.84% over the past week, down 5 basis points by 6.84%. This was below the annual peak of 7.18%.
Traditionally, a 30-year fixed mortgage rate tracks financial security yields for the benchmark 10-years.
Despite volatility over the past few weeks, the US Treasury market has remained stable, with yield trading from 4.23% to 4.34% over the decade.
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Mike Fratantoni, senior vice president and chief economist at the Mortgage Banks Association, says recent data from the national mortgage market comes when the US is mixed with economic signals.
“Last week’s economic news included negative readings of first quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid April employment report,” Fratantoni said in a statement. “The net impact on mortgage rates was mostly downward, but we returned to levels from early April.”
In the first quarter, the US economy signed 0.3%. This was driven by a sharp increase in imports and a modest decline in government spending. Meanwhile, the US labor market added 177,000 new jobs in April, surpassing expectations.
Other daily and weekly measures show that the 30-year fixed mortgage rate is below the 7% threshold.
Redfin economist Chen Zhao expects there will be little change in mortgage rates.
Spring purchase season
The US real estate market has started off strong from the usually busy spring homebee season.
“While signing the contract is not a guarantee of a final closure, the robust rise in pending home sales means a significant accumulation of potential home buyers supported by continued employment growth,” said Lawrence Yun, Chief Economist at the National Association of Realtors.
Sign for sale in Maryland on November 12th, 2023. Madalina Vasiliu/The Epoch Times
Despite better home sales than expected, consumer research suggests that home buying intentions are weakening.
72% said they viewed the US housing market at a disadvantage.
Lisa Sturtevant, chief economist at Bright MLS, said the growing economic surprises and worsening consumer confidence could “contribute to a spring home buying and selling season that is later than typical spring this year.”
“So we could potentially see future home buyers pushing the uncertainty and taking advantage of more inventory and lower mortgage rates and boosting sales in the coming weeks.”
Housing supplies have improved this year, bringing inventory to patient highs.
The newly listed home has moved more than 9% ahead of a year ago.
“Despite this advancement, active inventory is 16.3% below the typical 2017-19 level, indicating that there is still evidence that the market still covers. That suggests that the profits in April are closing that gap faster than before,” the report states.
