May 12 Mortgage Rates

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Mortgage rates continued to climb this week, adding further financial pressure on hopeful homebuyers as they waded through the competitive spring and summer markets.

The 30-year fixed-rate mortgage averaged 5.3%, an increase from last week, when it averaged 5.27%, according to data released Thursday by Freddie Mac. This time last year, the 30-year rate was 2.94 percent.

The rate on the 15-year fixed-rate mortgage averaged 4.48%, down from last week’s average of 4.52%. A year ago at this time, it averaged 2.26%. The five-year adjustable rate averaged 3.98%, down from 3.96% last week. A year ago at this time, it averaged 2.59%.

“Monthly payments are up more than 50% in just four months due to rising mortgage rates,” said George Ratiu, senior economist at “While everyone is shocked by 8.3% inflation, 17% rent increases and 14% house prices, the impact of rising mortgage rates is even greater.”

High prices and multiple-offer situations have made it nearly impossible for first-time home buyers to buy property this spring, said Michael Isaacs, general manager of GO Mortgage in Columbus, Ohio.

Rising mortgage rates are compounding this problem. Last year, rates hit a low of 2.5% in October and November, and were at 3% last May, he said. The extra interest associated with higher rates adds hundreds of dollars to mortgage payments.

“Now they’re at 5.5%, which means monthly principal and interest is now $600 higher today than it was last year for a $400,000 mortgage,” he said. Isaacs said.

The pace of inflation slows slightly in April but remains at its highest level in 40 years

Buyers with fixed budgets who are looking for new homes have faced additional financial hardship for months now, with rising costs for gas, groceries and other daily necessities affected by the rise in inflation.

But the pace of inflation could start to slow, according to data released Wednesday by the Bureau of Labor Statistics, even as inflation remains at its highest level in 40 years. Prices rose 8.3% in April from a year earlier and 0.3% from the previous month. In contrast, March prices rose 8.5% from a year earlier and 1.2% from a month earlier.

What this means for home buyers and sellers is unclear. The signals are mixed as to whether the housing market is cooling.

While 15% of home sellers lowered their asking prices in the four weeks ending May 1, 56% of homes sold above listing price during that period, a record high. , according to Redfin Real Estate Brokerage. Listings continue to be well below last year’s already low level and prices are up 17% year over year.

Meanwhile, mortgage applications rose 2% from the previous week, according to the Mortgage Bankers Association. The refinance index fell 2% from the previous week and was 72% lower than the same week a year ago.

“Mortgage applications rose for the second week in a row, driven by a 5% increase in buying activity,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said in an e -mail. “With spring homebuying season in full swing, demand is still strong across much of the country, despite mortgage rates last hitting highs in 2009.”

Mortgage rates rise, but hot housing market slow to cool

This week’s rate hike comes about a week after the Federal Reserve raised its benchmark interest rate by half a percentage point, the largest increase since 2000 and the second of seven hikes. planned for this year. Although the central bank does not set mortgage rates, its own rate-setting activity affect them indirectly.

Stanley Middleman, president and CEO of Freedom Mortgage in Boca Raton, Fla., said there’s still “a lot of volatility in the market” and that he hopes his short-term rate hike will by the Fed will slow inflation and the rise in medium to long-term rates.

“However, there is a lag effect of Fed activity, so it will take longer to have an impact on inflation and, therefore, interest rates,” he said. declared.

The Mortgage Bankers Association also this week published its Mortgage Credit Availability Index (MCAI), which showed that credit availability declined in April. The MCAI fell 3.2% to 121.1, a drop that reflected tougher lending standards. This follows a decline in credit availability in March.

“The availability of mortgage credit fell for the second month in a row as lenders reacted to soaring mortgage rates over the past two months,” said Joel Kan, MBA associate vice president for economic and industry forecasting, in a press release.

— Rachel Siegel contributed to this report.

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