Mortgage Rates Fall in Latest Week. Economists Say this could Mark the Start of a Decline in Rates in 2023

Article originally posted on HERE on May 15, 2023

The numbers: Mortgage rates fell for the second week in a row amid expectations of inflation slowing over the rest of the year. The 30-year fixed-rate mortgage averaged 6.35% as of May 11, according to data released by Freddie Mac on Thursday. It’s down 4 basis points from the previous week — one basis point is equal to one hundredth of a percentage point. Last week, the 30-year rate was at 6.39%. At the same period last year, the 30-year was averaging at 5.3%. The average rate on the 15-year mortgage fell to 5.75% from 5.76% the previous week. The 15-year was at 4.48% a year ago. Freddie Mac’s FMCC, +1.31% weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage. Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 6.57% as of Thursday afternoon.

What Freddie Mac said: The drop in mortgage rates is a “welcome departure from the record increases of last year,” Sam Khater, chief economist at Freddie Mac, said in a statement.

“While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023,” he added. “This should bode well for the trajectory of mortgage rates over the long-term.”

What are they saying? “The decline in mortgage rates is good news for prospective homebuyers, but housing supply is still too low in many parts of the country,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said in a statement.

“Housing construction has slowed, and some would-be sellers are delaying decisions because of economic uncertainty, and an unwillingness to give up their low-rate mortgage,” he added.

Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.506% was trading below 3.4% during the afternoon trading session on Thursday.