The 30-year fixed-rate mortgage averaged 5.3% for the week ending July 28, according to data released by Freddie Mac on Thursday. That’s down 24 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.
The average rate on the 15-year fixed-rate mortgage fell 17 basis points over the past week to 4.58%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.29%, down 2 basis points from the prior week.
“Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk, and declining consumer confidence take a toll on homebuyers,” Sam Khater, chief economist at Freddie Mac, said in a statement.
“It’s clear that over the past two years, the combination of the pandemic, record-low mortgage rates, and the opportunity to work remotely spurred greater demand,” he added, but now, “as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes.”
Mortgage rates may fall further.
On Wednesday, the Federal Reserve raised interest rates again by 0.75 percentage points at the fastest pace since the 1980s, which adds to borrowing costs for businesses and consumers broadly.
But the market thinks the Fed is going to start to cut rates next year and that’s pushing down the benchmark 10-year rate, which could pressure mortgage rates down.
Lower demand is already manifesting in price adjustments in some markets: Sellers in cities like Reno, Nevada and Austin, Texas, are slashing list prices in a bid to attract more offers.
The yield on the 10-year Treasury note
fell below 2.7% in morning trading.
Write to MarketWatch reporter Aarthi Swaminathan at email@example.com