Mortgage rates for the week ending July 5
declined, marking the fifth week out of six in which the cost of borrowing
fell. According to Freddie Mac, the average
interest rate on a 30-year fixed-rate mortgage was 4.52% compared to 4.55% in
the week earlier. The mortgage rate on a 15-year fixed-rate mortgage was 3.99%,
down from 4.04%, while the five-year adjustable-rate mortgage stands at 3.74%,
down from 3.87%.
"After a rapid increase throughout most of
the spring, mortgage rates have now declined in five of the past six
weeks," said Freddie Mac in a press release announcing mortgage rates for
the week ending July 5. "The run-up in mortgage rates earlier this year
represented not just a rise in risk-free borrowing costs, but for investors,
the mortgage spread also rose back to more normal levels by about 20 basis
points. What that means for buyers is good news. Mortgage rates may have a
little more room to decline over the very short term."
At the same time that mortgage rates are
declining, property values continue to move higher. CoreLogic, the real
estate data company, said earlier this week that the nationwide home price
index was 7.1% higher in May when compared with a year earlier. On a
month-over-month basis, prices increased by 1.1% in May compared with April.
CoreLogic is forecasting the national home price index to increase by 5.1% on a
year-over-year basis from May of 2018 to May of next year. In June, home prices
are expected to have increased 0.3% compared with May.
"The lean supply of homes for sale is
leading to higher sales prices and fewer days on market, and the supply
shortage is more acute for entry-level homes," said Frank Nothaft, chief
economist for CoreLogic, in a press release. "During the first
quarter, we found that about 50% of all existing homeowners had a mortgage rate
of 3.75% or less. May's mortgage rates averaged a seven-year high of 4.6%, with
an increasing number of homeowners keeping the low-rate loans they currently
have, rather than sell and buy another home that would carry a higher interest
rate." The real estate data provider noted that, based on an analysis of
housing values in the 100 largest metropolitan areas in the country, 40% have
overvalued housing as of May, while 26% were undervalued and 34% were priced
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