Mortgage rates fell for the second consecutive week, falling below 5% for the first time since April.
In the past 12 months, we’ve seen mortgage rates trend upwards, rates went up as high as 5.91% in June. This time, we’re seeing mortgage rates drop for the second week in a row, falling below 5%, according to Freddie Mac. The 30-year fixed mortgage rates have fallen to an average of 4.99% in the week ending August 4. Just the week before, the rates were averaging 5.30%.
Mortgage interest rates for the week ending August 4, 2022
Mortgage trends from August 23, 2021 to August 4, 2022.
This mortgage dip below 5% is the sharpest drop in the cost of financing for a home since early July. But still, these rates are higher than the rates we’ve seen last year. This time last year, the 30-year fixed rate mortgage was hovering around 2.77%.
Higher mortgage rates can make it harder to buy a home because a higher interest rate means a higher monthly payment, which can shut some buyers out of the market.
If you bought a $250,000 home and made a 20% down payment of $50,000, you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years:
At 3% interest rate = $843 in monthly payments
At 4% interest rate = $955 in monthly payments
At 6% interest rate = $1,199 in monthly payments
Homes are becoming less affordable due to higher home prices, flat wages, and the rising cost of borrowing. The good news for home buyers is that prices are not rising as fast as they used to.
Average rates for other loan types are lower as well. The 15-year fixed-rate mortgage also dipped, from 4.58% last week to 4.26% while the 5/1 adjustable-rate mortgage is averaging 4.25%.
If you’re being offered a higher interest rate than expected, ask why and compare offers from different lenders.
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Source: GGAH
