Average long-term mortgage rates fall; 30-year loan at 5.1%
WASHINGTON (AP) — Average long-term U.S. mortgage rates fell this week for the second week in a row, though interest rates on the key 30-year home loan remain at decade-high levels.
Economic uncertainty and weakened homebuyer demand continue to loom over mortgage rates. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate declined to 5.1% from 5.25% last week. By contrast, the average rate stood at 2.95% a year ago.
The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, dipped to 4.31% from 4.43% last week.
Earlier this month, the Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point and signaling more big rate hikes to come. The Fed’s move, its most aggressive since 2000, means higher costs for mortgages as well as credit cards, auto loans and other borrowing for individuals and businesses.
Higher borrowing rates appear to be slowing the housing market, a crucial sector of the economy. Last month, sales of both existing homes and new homes showed signs of faltering, worsened by sharply higher home prices and a shrunken supply of available properties. Homeownership has become an increasingly difficult aspiration, especially for first-time buyers. Besides staggering inflation, rising mortgage rates and soaring home prices, the supply of homes for sale continues to be scarce.
The government reported Thursday that the U.S. economy shrank in the first three months of the year even though consumers and businesses kept spending at a solid pace. Last quarter’s drop in the U.S. gross domestic product — the broadest gauge of economic output — likely does not signal the start of a recession.
Analysts say the economy has likely resumed growing in the current April-June quarter.
The U.S. remains stuck in the painful grip of high inflation, which has caused particularly severe hardships for lower-income households, many of them people of color. Though many U.S. workers have been receiving sizable pay raises, their wages in most cases haven’t kept pace with inflation. In April, consumer prices jumped 8.3% from a year earlier, just below the fastest such rise in four decades, set one month earlier.