Mortgage rates were up slightly during the week ending May 20, as borrowers with excellent credit putting 20 percent down were offered rates averaging 3.00 percent on 30-year fixed-rate purchase mortgages.
That’s according to the latest weekly rate survey from Freddie Mac, which showed rates registering their first weekly increase in May. The survey, which records rates going back to 1971, showed 30-year, fixed-rate mortgages hitting an all-time low of 2.65 percent during the week ending Jan. 7, before heading back up to 3.18 percent in March.
“After a run up over the first few months of the year, rates have paused and hovered around three percent since March,” said Freddie Mac Chief Economist Sam Khater, in a statement. “Despite this favorable rate climate, there remains a shortage of homes for sale. The lack of housing supply has been compounded by labor disruptions and expensive building materials that are driving up the cost of new housing, making it difficult for homebuyers to find homes to purchase.”
Freddie Mac reported average rates for the following mortgage types for the week ending May 20:
- Rates on 30-year fixed-rate mortgages averaged 3.00 percent with an average 0.6 point, up from 2.94 percent last week but down from 3.24 percent a year ago.
- For 15-year fixed-rate mortgages, rates averaged 2.29 percent with an average 0.7 point, up from 2.26 percent last week but down from 2.70 percent a year ago.
- Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.59 percent with an average 0.3 point, unchanged from last week and down from 3.17 percent a year ago.
In a new forecast this week, Fannie Mae economists said they expect a gradual rise in rates this year and next, with 30-year fixed-rate mortgages averaging 3.5 percent by the final quarter of 2022. But inflation worries could drive steeper rate increases, they warned.
Minutes from the April 27-28 meeting of the Federal Reserve’s Federal Open Market Committee published Wedensday revealed that some Fed officials are open to debating whether to taper the Fed’s monthly purchases of $40 billion in mortgage-backed securities and $80 billion in Treasuries.
Those purchases help keep long-term interest rates low, and word that the Fed might consider tapering in the months ahead initially sent yields on 10-year Treasurys, a benchmark for mortgage rates, to soar. But 10-year Treasury yields were down Thursday, as investors continued to weigh the likelihood of the Fed tapering its bond purchases.
Even small moves in mortgage rates can have a big impact on homebuying power. A recent analysis by First American concluded that higher mortgage rates in March contributed to a $13,000 decline in homebuying power nationally.