Freddie Mac reports that the The 30-year fixed-rate mortgage (FRM) fell 47 basis points week-over-week, with an average of 6.61% for the week ending November 17, 2022, down from last week when it averaged 7.08%. A year ago at the same date, the 30-year FRM averaged 3.10%.
“Mortgage rates fell this week on incoming data suggesting inflation may have peaked,” said Sam Khater, Chief Economist of Freddie Mac. “Although lower mortgage rates are good news, there is still a long way to go for the housing market. Inflation remains high, the Federal Reserve is expected to keep interest rates high, and consumers will continue to feel the impact.
Also this week, Freddie Mac announced that the 15-year FRM averaged 5.98%, down 40 basis points from last week when it averaged 6.38%. A year ago at this time, the 15-year FRM averaged 2.39%.
Falling mortgage rates also spurred an increase in the volume of mortgage applications last week, as the The Mortgage Bankers Association (MBA) has reported an increase in the overall volume of mortgage applications 2.7% week-over-week for the week ending November 11, 2022.
“Application activity, adjusted for the Veterans Day holiday, increased in response to lower rates, driven by a 4% increase in home purchase applications,” added Joel Kan, MBA Vice President and Deputy Chief Economist. “Purchase requests increased for all loan types, and the average purchase loan fell to its smallest amount since January 2021. Refinance activity remained depressed, down 88% on the There is very little incentive to refinance with rates so much higher than last year.
Affordability remains an issue because Redfin reports homebuyers nationwide must now make $107,281 to pay a monthly mortgage payment of $2,682 on a typical U.S. home, up 45.6% from $73,668 a year ago. From February 2020 to October 2022, the monthly payment for an American family buying the home at the median price increased by about 70%. Affordability issues are one of the main reasons home sales have slowed so dramatically in recent months.
“High rates are forcing buyers to rethink their priorities as many of them can no longer afford the home they want in the location they want,” Washington, D.C. said. Agent RedfinChelsea Traylor. “If you had a budget of $900,000 a few months ago, the rate hike means it’s now around $700,000 and sellers aren’t lowering their prices enough to compensate for the change. So shoppers are looking further out of town in more affordable areas or waiting for prices and/or rates to drop before moving.
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