Mortgage rates dropped this week, with the 30 year loan dipping below the 5% mark, according to Freddie Mac.
The average mortgage rate for a 30 year fixed-rate mortgage dropped to 4.99% for the week ending August 4, according to Freddie Mac's Primary Mortgage Market Survey. This is slightly down from last week when it averaged 5.3% but was up from 2.77% last year.
The 15 year mortgage was down to 4.26% last week, down from 4.58% last week, but up from 2.1% last year. The five-year Treasury-indexed hybrid mortgage ARM decreased to 4.25%. This is down from 4.29% last week, but up from 2.4% last year.
Mortgage rates remained volatile due to the tug of war between inflation and a slowdown in economic growth, Freddie Mac Chief Economist Sam Khater said. The Federal Reserve will try to navigate the current economic environment because of the high uncertainty surrounding inflation and other factors. If you want to take advantage of lower mortgage rates, consider refinancing your loan to lower your monthly mortgage payment or save money over the life of the loan. You can find your personalized interest rate at Credible without affecting your credit score.
Fannie Mae recently predicted that the economy will likely see a recession this year. The mortgage company's Economic and Strategic Research ESR Group predicted that real gross domestic product GDP will increase by 0.1% in 2022 and then fall by 0.4% in 2023, according to its July commentary.
In the first quarter of 2022, real GDP decreased by 1.6% annually, according to the Bureau of Economic Analysis BEA. The GDP contracted by 0.9% annually in the second quarter, hitting the technical definition of a recession.
The recession narrative is an important role in market psychology and investor expectation, as we see the upward push in rates more visibly, George Ratiu, Realtor.com's manager of economic research, said in a statement.
If you want to take advantage of the mortgage rates while they are lower, consider refinancing your home loan. Click here to compare multiple mortgage lenders at once and choose the one with the best interest rate.
The Federal Open Market Committee raised rates at its July meeting by 75 basis points in order to combat rising inflation, bringing the target range for the federal funds rate to 2.25% to 2.5%. The Federal Reserve previously raised interest rates by 75 basis points in June, marking the largest rate hike since 1994. There are more rate hikes from the central bank on the horizon.
Inflation continues to run too high, and the Fed remains committed to slowing it even if it leads to a recession, said Mike Fratantoni, Mortgage Bankers Association MBA senior vice president and chief economist, at the time of the Fed's July announcement. At least the rest of this year, rate increases are baked in. The commitment to this path is highlighted by the unanimous vote for this rate increase. Mortgage rates will likely go up as the Fed raises the federal funds rate. You can take advantage of today s lower mortgage rates by refinancing your home loan. If this is the right option for you, contact Credible to speak to a mortgage loan expert and get your questions answered.
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