Mortgage Rates Are Down for Fourth Straight Week: Freddie Mac

Buying a home became a little bit more affordable this week, at least when it comes to the cost of borrowing. Interest rates for the most popular mortgage option, the 30-year fixed-rate loan, moved lower once again, reaching a low that homebuyers last enjoyed in mid-February.

The average rate for such a 30-year mortgage was 6.28% for the week ending April 6, according to Freddie Mac’s weekly rate analysis. That figure represents a small decline, of 0.04 percentage points, over the week before and extends the streak of rate reductions for 30-year mortgages to four consecutive weeks. Over that period, the rate has dropped by almost half a percentage point.

Not all the news was good, however. The average rate on a 15-year fixed-rate loan moved in the other direction this week, if also only slightly. The rate rose by 0.08 percentage points to 5.64%.

Lower rates are good news for homebuyers looking to buy during the spring, which is typically the busiest season for home sales. Many experts are optimistic that declining rates will revive a housing market that, among other factors, has been beset by the high cost of borrowing since the middle of last year.

By contrast, prior to mid-2022, mortgage rates hit record lows, which helped send a surge of buyers onto the market. And where homebuying activity typically varies widely by the time of year, those low rates prompted buyers to be active year-round. Indeed, seasonality pretty much disappeared from the super-heated housing market.

With so many buyers poised to enter the market now, the time of year continues to matter less than it once did, according to Shauna Pendleton, a Redfin agent in Boise, Idaho. “There’s no seasonality,” Pendleton said in a news release. “If rates end the week down, all of a sudden buyers are out there making offers. If rates end the week high, buyers disappear.”

While mortgage rates are a key factor driving the market, buyers still have to reckon with other considerations, “not the least of which is the low inventory of homes for sale, especially for aspiring first-time homebuyers,” Freddie Mac chief economist Sam Khater cautioned in a press release.

Rates move lower as the economy shows signs of slowing

Although the banking turmoil that sent rates tumbling just a few weeks ago seems to have passed, other signs of weakness are sending jitters through the economy, and helping send mortgage rates lower.

On Tuesday, the Bureau of Labor Statistics released its Job Openings and Labor Turnover Survey (JOLTS), and it showed the number of job openings fell to 9.93 million in February, the lowest number of vacancies recorded in almost two years. It’s also lower than market expectations, which had forecast a robust 10.4 million openings.

“Up until now, a strong labor market supported consumer spending,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans in prepared remarks. The JOLTS report “showed a notable decline in hiring and quits, indicating a cooling of the labor market,” he added.

That report was followed on Wednesday by data from payroll processing firm ADP, which revealed that private-sector hiring had increased by 145,000 hires in March. Again, that was well below analysts’ expectations, which were for 210,000 new hires in the month

Both reports indicate that the labor market may finally be weakening. Less robust hiring was one of the goals of the aggressive monetary policy set by the Federal Reserve in its fight against high inflation.

There was also some positive news on the inflation front as the personal consumption expenditure price index, released last Friday, showed core inflation increased by 0.3% in February, which is less than the 0.4% estimated by market analysts. Year-over-year, core inflation (excluding food and energy costs) was 4.6%, just a tad lower than the 4.7% reported in January.

This trifecta of economic news – fewer job openings, lower hiring, slowing inflation – together seems to point to an economic slowdown that suggests progress in the overall fight against inflation. And, combined with other economic news, including a decline in manufacturing orders, more success may lie ahead, according to Divoungay. He notes that “consumer price inflation is likely to cool,” sending long-term yield rates, including those for mortgages, lower.

By slowing down economic growth, the Fed hopes to put a damper on consumer demand for goods and services, thereby bringing prices, and inflation, down as well. The question is whether the central bank can slow demand enough to tame prices without sending the country into a recession.

The Federal Reserve is looking for signs of labor weakness and continued improvement in consumer prices to help inform its monetary policy decision at its next meeting in May.

Markets will now await Friday’s employment report for whether it reveals further signs of a weakening economy. Overall, slower job and wage growth could influence the Federal Reserve’s decision on whether to continue to increase the federal fund rate, and by how much, or to pause increases altogether, at least for the moment.

More from Money:

Best Mortgage Lenders of 2023

Mortgage Calculator by Money

How to Get the Lowest Mortgage Rate: A Step-by-Step Guide

inflation
monetary
markets
reserve
policy
interest rates
fed
central bank
monetary policy