Mortgage rates fell slightly this week after climbing for a month straight, sparking an increase in purchase applications in a housing market that has largely been stalled for months amid sky-high home prices and persistently elevated rates.
Freddie Mac's latest Primary Mortgage Market Survey released Thursday showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.88% this week, down from 6.94% last week. The average rate on a 30-year loan was 6.73% a year ago.
The average rate on the 15-year fixed mortgage also fell a bit to 6.22% after coming in last week at 6.26%. One year ago, the rate on the 15-year fixed note averaged 5.95%.
"Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates," said Sam Khater, Freddie Mac’s chief economist.
"Mortgage rates continue to be one of the biggest hurdles for potential homebuyers looking to enter the market," Khater added.
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The Mortgage Bankers Association reported Wednesday that the decline in rates led to a nearly 10% rise in mortgage applications, while FHA purchase applications jumped 16%.
Still, with rates remaining in the high 6% range, many potential buyers and sellers – the vast majority of whom are locked in at rates below 5% – are waiting on the sidelines for mortgage rates to come down further before making a move.
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At the same time, home prices are at an all-time high amid a shortage of homes on the market, continuing to drive an affordability crisis for the housing market.
