The average daily rate for a 30-year fixed-rate loan was 6.85%. That’s 12 basis points lower than this time last week.
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U.S. mortgage rates fell yet again this week. Data from Freddie Mac on May 4 showed that 30-year, fixed-rate mortgage rates dipped to 6.39%. And according to Bankrate data, which looked at overnight averages of advertisers on its site, 30-year fixed-rate loans are now hovering around 6.85% after sliding 7 percentage points to 6.93% last week, according to Bankrate data. (See the best mortgage rates you can get now here.) One mortgage expert says much of the reason for the consecutive declines has to do with the latest benchmark rate hike from the Federal Reserve and the overall outlook for the year ahead.
Although the Fed raised rates for the 10th consecutive time this week, Jeff Ostrowski, senior mortgage reporter at Bankrate, says signs are largely pointing to a changing tide when it comes to the housing market. “The consensus is that the Federal Reserve is done raising interest rates, and that mortgage rates will drift lower from here,” Ostrowski suggests, adding however that “just when you think you know where rates are going, the market gets a surprise, such as Friday’s strong jobs report.”
Nevertheless, Ostrowski says most experts predict mortgage rates will indeed fall when the economy slows down. And although there were many predictions last year that we would surely hit a recession in 2023, “as the Fed’s tightening finally has its effect, mortgage rates are likely to fall below 6% by the end of the year,” he predicts.
See the best mortgage rates you can get now here.
For house hunters worried about high rates, Ostrowski says mortgage rates should not dictate your decision to buy a home or not. “Rates are unlikely to return to the record-low levels seen during the depths of the pandemic,” he says, adding that while “mortgage rates are incredibly difficult to predict,” you can still provide some “protection against increases by locking in a rate. And if rates fall before you close, you still can take advantage of a better deal.”
Here’s what rates have done in the week ending on May 5, 2023, according to overnight average data from Bankrate:
30-year fixed-rate loans
The average daily rate for 30-year, fixed-rate mortgages was 6.85%, down 12 basis points from last week (each 1% of a mortgage rate is made up of 100 basis points). The refinance rate for 30-year, fixed-rate loans was 7.02%, declining 15 basis points from the previous week.
15-year fixed-rate loans
Mortgages with a 15-year fixed rate averaged 6.18%, a decline of 9 basis points from the prior week.
Jumbo mortgages
For jumbo loans, which cover properties that are more expensive than those under a conventional conforming loan — about $647,000 in most areas — the rate was 6.94%, a decrease of 14 basis points from the same day last week.
See the best mortgage rates you can get now here.
ARMs
As for 5/1 adjustable-rate mortgages, which carry a fixed rate for five years that can then rise or fall each year after, the average was 5.75%, unchanged from last week.
FHA and VA loans
The average rate for 30-year Federal Housing Administration-insured mortgages was 6.06%, down 25 basis points from a week ago. Mortgages backed by the Department of Veterans Affairs, meanwhile, reached a rate of 6.02%, a decrease of 22 basis points from the previous week.
Editor’s Note: Parts of this story were auto-generated by Automated Insights, an automation technology provider, using data from Bankrate. See our market data terms of use.
Mortgage rates in this article reflect Bankrate’s average rates. A previous version simply referred to them as average rates.
Source: marketwatch.com