Mortgage rates continue to drift downward
Inflation is heating up and the economy is improving, yet mortgage rates keep falling.
According to data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to 2.88%, with an average 0.7 point. (Points are fees paid to a lender equal to 1% of the loan amount. They are in addition to the interest rate.) It was 2.9% a week ago and 2.98% a year ago.
Since rising to 3.18% in April, the 30-year fixed average has fallen 30 basis points. A basis point is 0.01 percentage point.
Freddie Mac, a federally chartered mortgage investor, aggregates rates from about 80 lenders nationwide to come up with weekly national averages. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.
The survey is based on home purchase mortgages, which means that rates for refinances may be higher. The price adjustment for refinance transactions that took effect in December is adding to the cost. The adjustment, which applies to all Fannie Mae and Freddie Mac refinances, is 0.5% of the loan amount. That works out to $1,500 on a $300,000 loan.
The 15-year fixed-rate average slid to 2.22% with an average 0.6 point. It was 2.2% a week ago and 2.48% a year ago. The five-year adjustable rate average fell to 2.47% with an average 0.3 point. It was 2.52% a week ago and 3.06% a year ago.
"Mortgage rates are falling, even though inflation is running hotter than expected," said Holden Lewis, a home and mortgage specialist at NerdWallet. "That's an unusual combo, and you can trace it back to the pandemic. The Federal Reserve believes high inflation is a temporary issue that arises from the global economy's uneven restart. Because it deems high inflation temporary, the Fed doesn't plan to cut back on purchases of mortgage-backed...