By Aarthi Swaminathan
Mortgage rates have fallen to the lowest level since December 2008.
The 30-year fixed-rate mortgage averaged 5.3% for the week ending July 7, according to according to data released by Freddie Mac on Thursday. That’s down 40 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.
The average rate on the 15-year fixed-rate mortgage dropped 38 basis points over the past week to 4.45%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.19%, down 31 basis points from the prior week.
“Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise,” Sam Khater, chief economist at Freddie Mac, said in a press release.
“While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” he added.
The drop in rates, alongside a a 5.4% drop in mortgage applications for the week ending July 1, reveals a broader cooling in the housing market.
The mortgage applications data is reported by the Mortgage Bankers Association on a weekly basis.
“Mortgage rates decreased for the second week in a row, as growing concerns over an economic slowdown and increased recessionary risks kept Treasury yields lower,” the association’s Joel Kan said on Wednesday.
Still, rates are much higher than they were a year ago. The 30-year averaged at 2.9% same time last year, Freddie Mac said.
The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.94% rose above 2.95% during the morning trading session.