Mortgage rates add to recession woes
US mortgage rates fell again after climbing over the past two weeks, signaling that recession jitters are weighing on investors and buyers as the housing market continues to cool.
Freddie Mac’s latest primary mortgage market survey released Thursday shows the average rate on a 30-year fixed-rate mortgage is now 5.3%, down 5.54% from last week , but up from 2.8% a year ago.
The average for a 15-year fixed-rate note also fell, from 4.75% to 4.58%. The same week in 2021, the 15-year rate was 2.1%.
The declines come as investors sought a safe haven in US Treasuries amid recession fears ahead of Thursday’s gross domestic product report confirming a second consecutive quarter of economic contraction.
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While lower mortgage rates are a welcome sign for potential home buyers, rates remain high and demand in the housing market continues to fall amid sky-high house prices and high inflation for four decades. eating away at American budgets.
The National Association of Realtors reported Wednesday that its pending home sales index fell 8.6% in June from the previous month, down 20% from June 2021.
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“Buying demand continues to fall as the cumulative impact of higher rates, high home prices, heightened risk of recession and declining consumer confidence weighs on homebuyers,” said Sam Khater, chief economist at Freddie Mac.
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“It’s clear that over the past two years the combination of the pandemic, record mortgage rates and the ability to work remotely have spurred increased demand,” Khater said. “Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated selling activity until the market normalizes.”
Megan Henney of FOX Business contributed to this report.