Mortgage Rates Dip After 5-Week Climb, Freddie Mac Says

Rachel Acenas
By Rachel Acenas
May 9, 2024US News
Mortgage Rates Dip After 5-Week Climb, Freddie Mac Says
A 'For Sale' sign is posted on the lawn of a home in Miami on March 15, 2024. (Joe Raedle/Getty Images)

Mortgage rates ticked down for the first time since March but remained above 7 percent, according to mortgage buyer Freddie Mac, on Thursday.

The average rate on a 30-year mortgage fell to 7.09 percent from 7.22 percent last week. The dip follows five straight weeks of increases that pushed the average rate to its highest level since November 30.

The rate averaged 6.35 percent a year ago.

“An environment where rates continue to hover above seven percent impacts both sellers and buyers,” according to a statement by Sam Khater, Freddie Mac’s chief economist.

“Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated. These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment,” he added.

Defined as the interest rate a person pays on the money borrowed to buy a house, mortgage rates affect a potential buyer’s ability to afford a home. A lower rate makes homes more affordable because it costs a buyer less to borrow money, which ultimately increases a homebuyer’s purchasing power.

Atlanta-based realtor Alan Corey told NTD News in a statement that the modest dip, although still above 7 percent, can provide some relief and motivate homebuyers in what has been a challenging market, especially during this time of year.

“The drop in mortgage rates coupled with the upcoming end of the school year will create a sharp increase in buyer frenzy as families look to get settled and locked in on a new 30 year mortgage term,” Mr. Corey predicted.

“I’d expect multiple offers on anything move-in ready or for properties in good school districts for retail home buyers. For investors, they are going to be more willing to buy the fixer uppers that have been sitting on the market now that the numbers will work a little better,” he added.

Borrowing costs on 15-year fixed-rate mortgages also declined this week to 6.38 percent from 6.47 percent last week, according to Freddie Mac’s data. The data is particularly important for homeowners looking to refinance their home loans. The rate averaged 5.75 percent last year.

Lenders set a mortgage rate for each person based on several personal financial factors, such as credit, down payment, and income. Other factors include inflation, the cost of borrowing, bond yields, and risk. April’s inflation numbers will largely impact whether this week’s friendlier mortgage rate will continue. That data will be published next week.

But Americans may want to take advantage of the mortgage dip following its five-week climb. Prospective buyers should strike while the iron’s hot, according to Mr. Corey.

“My advice would be to get pre-approved now for a local mortgage broker, have your agent ready to show you a property at a moment’s notice and try your best to get the first offer in. The ones ready to pounce quickly will get rewarded the most,” he said.

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