Mortgage rates in the U.S. slipped below 5% for the first time in almost four months, giving borrowers a reprieve after this year’s rapid surge.
The average for a 30-year loan fell to 4.99% from 5.3% last week, Freddie Mac said Thursday in a statement. That’s the lowest since early April and the biggest one-week drop since early July.
The decline in rates may help some homebuyers who were priced out this year by the fastest rising borrowing costs in decades. The Federal Reserve’s campaign to curb inflation by driving up its benchmark rate is putting an end to the pandemic housing boom. Sales are now sinking and inventory is starting to climb.
“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth,” said Sam Khater, Freddie Mac’s chief economist. “The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, especially as the Federal Reserve attempts to navigate the current economic environment.”
At the current 30-year average, a borrower with a $300,000 mortgage would pay $1,608 a month, roughly $326 more than at the end of last year.
The U.S. has been marching toward a recession with the economy shrinking for a second straight quarter, according to data released last week. But there have been positive signs lately, with growth in the U.S. services sector unexpectedly strengthening to a three-month high in July.
“Capital markets are seeking a stronger directional signal about economic activity amid the push-and-pull of consumer spending and business investments,” said George Ratiu, Realtor.com’s manager of economic research. “Without a clear direction, markets are confining mortgage rates to move within a tighter range, as the sharp upward push has moderated.”
This article was provided by Bloomberg News.