Mortgage rates trended slightly higher over the past week, but stayed below 3%. Nevertheless, there’s growing evidence that home buyers are exiting the real-estate market, likely stymied by the low supply of properties for sale.
The 15-year fixed-rate mortgage held steady at an average of 2.27%. The 5-year Treasury-indexed adjustable-rate mortgage averaged 2.64%, up five basis points from the previous week.
Typically, mortgage rates roughly follow the path of the yield on the 10-year Treasury
The long-term bond’s yield modulated over the past week, as investors awaited key data on the state of the economy.
The slight uptick aside, mortgage rates remain at historically low levels. For comparison, at this time last year the 30-year loan was averaging 3.18%. But the low rate environment isn’t providing the same boost to home buyers as it once was.
“While interest rates remain affordable, and about 20 basis points below last year, the double-digit home price gains of the past 10 months have pushed the median listing price to a new record high, translating into a monthly mortgage payment $150 higher than the same time in 2020,” said George Ratiu, senior economist at Realtor.com.
‘The double-digit home price gains of the past 10 months have pushed the median listing price to a new record high, translating into a monthly mortgage payment $150 higher than the same time in 2020.’
— George Ratiu, senior economist at Realtor.com
(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a division of News Corp.)
There continues to be a dearth of homes for sale. Making matters even more challenging, buyers who plan to live in the home they purchase not only face competition with each other but also with investment funds that are scooping up homes across the country to convert into rentals.
Some buyers appear to be calling it quits. Mortgage applications have fallen for two consecutive weeks now, according to data from the Mortgage Bankers Association. Overall, the volume of mortgage applications has fallen to the lowest level since February 2020, though the decline also captures the downturn in refinance applications as mortgage rates have increased from their record lows.
Those who remain in the market to buy a home could soon face higher rates — though that will depend on the monthly jobs report for May.
“Last month’s report was universally viewed as a disappointment — signaling to markets that the economic recovery may play out at a slower pace than previously anticipated — and the uncertainty it injected has helped prevent mortgage rates from moving meaningfully higher in the weeks since,” said Matthew Speakman, an economic with Zillow
Should May’s report come in strong as expected, mortgage rates would likely be forced higher by investor pressure, Speakman said.