The average rate on 30-year mortgages slipped to 5.55 percent this week, down from 5.59 percent the previous week and hitting a four-week low, according to Bankrate’s national survey of large lenders.
The Federal Reserve continues to move aggressively to rein in inflation, announcing its second consecutive rate hike of three-quarters of a percentage point in July. By conventional wisdom, this would lead to rising mortgage rates, but concerns around a recession have stalled the increases for now.
The Fed also doesn’t directly control fixed mortgage rates; the most pertinent number is the 10-year Treasury yield, which has bounced around in recent weeks.
Even so, high inflation all but forces the Fed to act aggressively, and it sets the tone for rates overall.
“The cumulative effect of this sharp rise in rates has cooled the housing market and caused the economy to start slowing, but hasn’t done much to lower inflation,” says Greg McBride, Bankrate’s chief financial analyst.
A year ago, the benchmark 30-year fixed-rate mortgage was 3 percent. Four weeks ago, the rate was 5.55 percent. The 30-year fixed-rate average for this week is 2.55 percentage points higher than the 52-week low of 3 percent.
The 30-year fixed mortgages in this week’s survey had an average total of 0.49 discount and origination points.
Over the past 52 weeks, the 30-year fixed has averaged 4.15 percent.
- The 15-year fixed-rate mortgage was 4.69 percent, down from 4.73 percent last week.
- The 5/6 adjustable-rate mortgage (ARM) ticked up to 4.89 percent from 4.84 percent a week ago.
- The 30-year fixed-rate jumbo mortgage was 5.21 percent, also up, from 5.11 percent last week.
Where mortgage rates are headed
The predictions shared in Bankrate’s August 2022 mortgage rate forecast aligned on one thing: the 30-year fixed should stay in the mid-5s, or even low 5s, for the time being.
“August will be an interesting month for interest rates, with the Fed decision in July to raise rates seemingly having no impact so far on raising actual mortgage rates,” says Ralph DiBugnara, president of real estate video series Home Qualified. “I believe that a lot of the increases in mortgage rates have been built-in to account for the Fed’s new policy to raise rates regularly in 2022. As fears of a recession seem to be outweighing fears of inflation, rates have continued to come down.”
In a disconnect, home prices have been soaring even with the rate rise. The median price for existing houses sold in June was $416,000, up 13 percent from June 2021, the National Association of Realtors reports, while sales have fallen for the fifth month in a row.
Economists had expected rates to rise by the end of 2022, but the surge and subsequent pullback in recent weeks has many forecasters wondering what comes next. As mortgage rates retreat from 6 percent, competition among homebuyers could ease further. It remains to be seen how home sales activity shakes out for the remainder of the year.
The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.