The average for the 30-year fixed-rate mortgage fell slightly to 6.35% this week, Freddie Mac reported Thursday, helping buyers save more on borrowing costs. “This week’s decrease continues a recent sideways trend in mortgage rates, which is a welcome departure from the record increases of last year,” says Sam Khater, Freddie Mac’s chief economist. Late last year, 30-year rates surged to 7%—more than double what they were a year earlier.
“While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023,” Khater notes. “This should bode well for the trajectory of mortgage rates over the long-term.”
During the 2023 REALTORS® Legislative Meetings in Washington, D.C., this week, Lawrence Yun, chief economist for the National Association of REALTORS®, predicted that mortgage rates likely will fall closer to 6% this year and below 6% in 2024.
Rates have been falling as inflation dips below 5%, explains Nadia Evangelou, NAR’s senior economist and director of real estate research. Even rent prices—a large gauge within inflation indexes—are falling, which will help slow down inflation even further in the coming months. That, in turn, will pull down mortgage rates even further. And that, she says, “could bring some sighs of relief to many buyers. With a 6% mortgage rate, more Americans can afford to purchase the median-priced home by putting down less than 20%.”
Home buyers have shown themselves to be rate-sensitive, particularly while up against elevated home prices. As mortgage rates have fallen over recent days, home buyers have been quick to respond: Mortgage applications for purchasing a home rose 5% last week, the Mortgage Bankers Association reported Wednesday. If home prices start to stabilize more—as they’re already showing signs of doing—more potential home buyers may start to emerge.
Freddie Mac reports the following national averages with mortgage rates for the week ending May 11:
- 30-year fixed-rate mortgages: averaged 6.35%, dropping from last week’s 6.39% average. Last year at this time, 30-year rates averaged 5.30%.
- 15-year fixed-rate mortgages: averaged 5.75%, dropping slightly from last week’s 5.76% average. A year ago, 15-year rates averaged 4.48%.