Rates for home loans ticked down for the second straight week, offering buyers a brief reprieve in a sizzling housing market.
The 30-year fixed-rate mortgage averaged 4.54% during the June 7 week, down 2 basis points, Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 4.01%, down from 4.06%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.74%, down 6 basis points.
Those rates don’t include fees associated with obtaining mortgage credit.
The market moves that sent investors piling into safe-haven assets unwound over the past few weeks, as fears about Italy receded. As bond prices decline, their yields rise. Mortgage rates track the 10-year U.S. TreasuryTMUBMUSD10Y, -1.10% note.
Fresh concerns may make bonds less attractive in the coming weeks, and push mortgage rates back upward.
In the housing market, supply and demand remain uncomfortably out of whack. In Fannie Mae’s May housing sentiment index, the net share of respondents saying now is a good time to sell a time was 46%, while a net 28% said it’s a good time to buy.
And in April, the National Association of Realtors’ index of home-contract signings fell to a three-month low as supply constraints continue to bite.
What’s more, the mortgage rate reprieve may be short-lived, Freddie’s chief economist, Sam Khater, warned.
“Although demand has remained steadfast against the backdrop of this year’s higher borrowing costs, it’s important to note that the growth rate of purchase loan balances has moderated so far this year – and particularly since March,” Khater said. “This slowdown indicates that buyers are having difficulty stretching to keep up with the pace of home-price growth.”