The 15-year fixed-rate average remained at 4.04 percent with an average 0.5 point. It was 3.17 percent a year ago. The five-year adjustable rate average reached 3.87 percent with an average 0.3 point, up from 3.83 percent a week ago. It was 3.17 percent a year ago.
“The decrease in borrowing costs are a nice slice of relief for prospective buyers looking to get into the market this summer,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Some are undoubtedly feeling the affordability hit from swift price appreciation and mortgage rates that are still 67 basis points higher than this week a year ago.”
Home buyers should “lock in at the lower rate,” said Lawrence Yun, chief economist at the National Association of Realtors, noting that the Federal Reserve is expected to raise interest rates twice this year and another two times next year. “I think if the buyer is hesitant seeking lower rates, they will be disappointed. The general direction will be higher and higher interest rates.”
Meanwhile, mortgage applications decreased from a week earlier, according to the Mortgage Bankers Association (MBA). The market composite index — a measure of total loan application volume — declined 4.9 percent. The refinance index dropped 4 percent, while the purchase index fell 6 percent.
The refinance share of mortgage activity accounted for 37.6 percent of all applications.
“Home purchase applications fell almost 6 percent as still tight existing home inventories continue to hold down purchase transactions,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Refinance applications decreased more than 3 percent, driven mostly by a drop in conventional refinances.”