According to Freddie Mac's latest Primary Mortgage Market Survey, after declining for two straight weeks, U.S. mortgage rates reversed direction this week and rose to their second highest level this year.
Sam Khater, Freddie Mac's chief economist, says the rising interest rate environment of today's economy continued over the past week. "The 30-year fixed-rate mortgage climbed eight basis points to 4.62 percent, and the Federal Reserve Board on Wednesday raised the federal funds rate by 25 basis points," he said. "The good news is that the impact on consumer budgets will be smaller than past rate hike cycles. That is because a much smaller segment of mortgage loans in today's market are pegged to short-term rate movements. The adjustable rate mortgage (ARM) share of outstanding loans is a lot smaller now - 8 percent versus 31 percent - than during the Fed's last round of tightening between 2004 and 2006."
Added Khater, "Still, inflation continues to firm and borrowing costs are inching higher. Although wages are slowly growing, stronger gains would certainly go a long way in helping consumers offset these increases in prices and rates."
Freddie Mac News Facts
30-year fixed-rate mortgage (FRM) averaged 4.62 percent with an average 0.4 point for the week ending June 14, 2018, up from last week when it averaged 4.54 percent. A year ago at this time, the 30-year FRM averaged 3.91 percent.
15-year FRM this week averaged 4.07 percent with an average 0.4 point, up from last week when it averaged 4.01 percent. A year ago at this time, the 15-year FRM averaged 3.18 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.83 percent this week with an average 0.3 point, up from last week when it averaged 3.74 percent. A year ago at this time, the 5-year ARM averaged 3.15 percent.
According to Freddie Mac's May 2018 Outlook Report, swift U.S. home-price growth and the ongoing climb in mortgage rates this year have made buying a home more expensive, but home sales are still on track to squeak out a gain in 2018.
After two straight months of modest increases, pending home sales in U.S. dipped in April 2018 to their third-lowest level over the past year. All major regions saw no gain in contract activity last month.
According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index released this week, strong U.S. wage growth more than offset an increase in mortgage interest rates to boost nationwide housing affordability in the first quarter of 2018.
According to Freddie Mac's latest Primary Mortgage Market Survey, U.S. mortgage rates were unchanged over the past week in early May 2018. The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market.