Mortgage interest rates have fallen to an average of 6.30%, renewing hopes for a more active spring home buying season.
Mortgage rates are trending lower, according to Freddie Mac’s Primary Mortgage Market Study (PMMS) released Thursday.
The average interest rate on a 30-year fixed-rate mortgage reached 6.3% on April 16, a notable drop from last week (6.37%) and last year (6.83%). The drop was the lowest in four weeks and “is a meaningful improvement for homebuyers during what is normally a busy spring home buying season,” said Freddie Mac Chief Economist Sam Cater.
Lisa Sturtevant, chief economist at Bright MLS, said two ceasefires between the US, Israel, Iran and now Lebanon likely spurred the decline. Traffic in the Strait of Hormuz remains unstable, with Iranian authorities imposing tolls on tankers. According to the BBC, 15 tankers passed through the Strait in the week ending March 30, down from an average of 140 a day before the conflict. According to an April 10 report, approximately 800 ships are currently stranded in the Persian Gulf.
Lisa Sturtevant
“While the ceasefire announcement earlier this month may have temporarily eased mortgage rates, the outlook for the spring market remains uncertain at this time,” Sturtevant said in an emailed statement. “There remains great uncertainty over the long-term resolution of the conflict with Iran, and mortgage rates are likely to remain volatile.”
“Furthermore, inflation rose to 3.3% in March. This rise in inflation has a lot to do with energy and global shipping, meaning interest rates are unlikely to fall in the short term,” he added.
Despite the ongoing uncertainty, Kyle Bass, production business manager at Refi.com, said this “modest” move is already starting to have a positive impact on homeowners and homebuyers.
Kyle Bass
“Recent Mortgage Bankers Association data shows an uptick in refinance activity as interest rates ease, indicating homeowners are starting to engage again after some time on the sidelines,” he said in an email to Inman. “This is not a rush due to urgency, but rather a measured return, with borrowers reevaluating their options and paying close attention to how current rates compare to current rates.”
Economists said government officials should view these early trends with some cautious optimism, and Sturtevant said the spring market was still stalled.
“Right now, the spring housing market is still a little shaky,” she said. “The number of new listings rose in March, indicating sellers are gearing up for spring. However, it remains to be seen whether the increase in inventory will be enough to attract buyers to the market. Rising interest rates continue to reduce buyers’ purchasing power, and uncertainty continues to deter potential buyers.”
“At Refi.com, we are seeing that change unfold in real time,” Bass added. “Borrowers are not rushing to take action, but they are becoming more aware of this opportunity. If rates continue to trend in this direction, even gradually, this type of early re-engagement could lead to more meaningful refinance activity in the coming weeks.”
Email Marian McPherson
