The Washington Post - USA (2022-05-28)

3

EZ

THE

WASHINGTON

POST

.

SATURDAY,

MAY

28, 2022

tions. The 30-year fixed average

went from 3.22 percent at the

start of the year to 5.3 percent

earlier this month, the fastest

gain since 1994, according to

Mortgage Rates

BY KATHY ORTON

For much of this year, mort-
gage rates had been steadily
climbing higher, reaching levels
not seen in more than a decade.
But these past few weeks have
offered a bit of a reprieve.
According to the latest data
released Thursday by Freddie
Mac, the 30-year fixed-rate aver-
age dropped to its lowest level in
five weeks, falling to 5.1 percent
with an average 0.9 point. (A
point is a fee paid to a lender
equal to 1 percent of the loan
amount. It is in addition to the
interest rate.) It was 5.25 percent
a week ago and 2.95 percent a
year ago.
Freddie Mac, the federally
chartered mortgage investor, ag-
gregates rates from around 80
lenders across the country to
come up with weekly national
averages. The survey is based on
home purchase mortgages. Rates
for refinances may be different. It
uses rates for high-quality bor-
rowers with strong credit scores
and large down payments. Be-
cause of the criteria, these rates

are not available t o every borrow-

er.

The 15-year fixed-rate average

slid to 4.31 percent with an aver-

age 0.8 point. It was 4.43 percent

a week ago and 2.27 percent a

year ago. The five-year adjustable

rate average rose to 4.2 percent

with an average 0.3 point. It was

4.08 percent a week ago and

2.59 percent a year ago.

“The Freddie Mac fixed rate for

a 30-year mortgage fell for the

second week in a row, following

Tuesday morning’s sharp dip in

the 10-year Treasury,” Joel Bern-

er, senior economic research ana-

lyst at Realtor.com, wrote in an

email. “Yields quickly fell 14 basis

points from the day’s open and

have hovered around 2.75 percent

since. Investors taking part in the

stock market sell-off of the past

five weeks have shifted their at-

tention to the debt market, driv-

ing up prices on T-bills and mort-

gage-backed securities. This al-

lowed mortgage rates to fall, even

amid inflation-cooling policies

initiated by the Federal Reserve.”

Mortgage rates have skyrock-

eted this year, outracing expecta-

Freddie Mac.

With inflation running at 40-

year highs, the Federal Reserve’s

aggressive moves to rein it in

have put upward pressure on

mortgage rates. Earlier this

month, the central bank raised its

federal funds rate by a half-per-

centage point, the sharpest in-

crease since 2000. The Fed’s min-

utes from that meeting, which

were released this week, indicate

two more hikes of a half-percent-

age point each are expected when

it meets in June and July.

Investors, who had been sell-

ing bonds over concerns about

inflation and tighter monetary

policy from the Fed, lately have

been putting their money into

Treasurys and mortgage-backed

securities now that the stock

market is swooning. The yield on

the 10-year Treasury, which rose

to a four-year high earlier this

month when it hit 3.12 percent,

fell to 2.75 percent on Wednesday,

its lowest level since mid-April.

Yields move inversely to prices.

Because mortgage rates tend to

follow the same path as long-

term bond yields, they too have

dipped.

“A lot of turmoil in the equity

markets lately,” said Ken H. John-

son, a real estate economist at

Florida Atlantic University. “This

is driving a lot of capital to the

temporary safety and shelter of

10-year Treasury notes. As their

prices rise, in response to the

increased temporary demand,

yields are falling slightly. The

correlation between 10-year

Treasurys and mortgage rates is

still strong.”

Bankrate.com, which puts out

a weekly mortgage rate trend

index, found the experts it sur-

veyed divided on where rates are

headed in the coming week. Thir-

ty-eight percent said they would

go up, another 38 percent said

they would go down and 25

percent said they would remain

about the same.

Meanwhile, mortgage applica-

tions fell again last week. The

market composite index — a

measure of total loan application

volume — decreased 1.2 percent

from a week earlier, according to

Mortgage Bankers Association

data.

Fixed r ates move lower for the second week in a row

Weekly averages for

popular mortgage types

May 27, 2021 May 26, 2022

1%

2%

3%

4%

5%

6%

5-Year ARM

4.31%

4.2%

5.1%

Source: Freddie Mac

NICK MOURTOUPALAS / THE WASHINGTON POST

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