Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Housing Beat: Mortgage Rates Keep Climbing As Inventory Levels Slowly Expand

Stock Markets May 12, 2022 17:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Housing Beat: Mortgage Rates Keep Climbing As Inventory Levels Slowly Expand

More homebuyers were taking out mortgages despite climbing rates while the tight housing inventory is showing signs of improving. Nonetheless, many homebuyers are not optimistic about the housing market’s near future.

On The Homebuying Front: Freddie Mac (OTC: FMCC) reported the 30-year fixed-rate mortgage averaged 5.30% as of May 12, up from last week when it averaged 5.27% — one year ago at this time, it averaged 2.94%. The 15-year fixed-rate mortgage averaged 4.48%, down from last week when it averaged 4.52% — it averaged 2.26% one year earlier. And the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.98%, up from last week when it averaged 3.96% and up from last year when it averaged 2.59%.

“Homebuyers continue to show resilience even though rising mortgage rates are causing monthly payments to increase by about one-third as compared to a year ago,” said Sam Khater, Freddie Mac’s chief economist. “Several factors are contributing to this dynamic, including the large wave of first-time homebuyers looking to realize the dream of homeownership. In the months ahead, we expect monetary policy and inflation to discourage many consumers, weakening purchase demand and decelerating home price growth.”

Homebuyer resilience was on display in the purchase market — the Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, was up by 2% and its Purchase Index rose 5% while its Refinance Index dipped by 2%. The refinance share of mortgage activity decreased to 32.4% of total applications from 33.9% the previous week.

“The rapid rise in mortgage rates continues to hit the refinance market, with activity 70% below a year ago. Most homeowners refinanced to lower rates in the past two years,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Despite a slow start to this year’s spring home buying season, prospective buyers are showing some resiliency to higher rates. Purchase activity has now increased for two straight weeks.”

See Also: 'Remain Cautious On Mortgage Originators': Rocket Companies Analysts React To Q1 Earnings

While purchase activity was on the rise, the share of home sellers who dropped their asking price reached a six-month-high of 15% for the four weeks ending May 1, according to data released by Redfin (NASDAQ: RDFN). That percentage was up from 9% one year ago and was the largest annual gain since Redfin began tracking the data in 2015.

Demand is still exceeding supply, however, and even homes with lower prices are being acquired as fast as they come on the market.

“Homebuyers continue to be squeezed in nearly every way possible, which is causing some to take a step back from the market,” said Redfin Chief Economist Daryl Fairweather. “Unfortunately for buyers hoping to find a deal as competition cools, sellers are pulling back even faster, which is keeping the market deep in seller’s territory. So even though price drops are becoming more common, most homes are still selling above asking price and in record time.”

On The Home Selling Front: But there might be good news on the way — new data from reported a 12.2% decline in active listings in April, which marks the smallest year-over-year decline since December 2019.

"April data suggests a positive turn of events is on the horizon for weary buyers: If the trends we're seeing now hold true, we could potentially see year-over-year inventory growth within the next few weeks," said Danielle Hale, chief economist for "While home shoppers are still seeking relief from record-high asking prices and all-time low supply, when compared to the past two-plus years of double-digit annual inventory declines, an imminent rebound is welcome news — a real estate refresh, if you will."

See Also: Benzinga's Stock Wars: M&T Bank Vs. Webster Financial

Nonetheless, homebuyers are not particularly optimistic the environment will improve.

Fannie Mae’s (OTC: FNMA) Home Purchase Sentiment Index in April decreased by 4.7 points to 68.5, its lowest level since May 2020, as surveyed consumers cited the minimal levels of housing affordability and rising mortgage rates for their gloom. All six of the index’s components decreased month over month, with 76% of consumers indicating they believe it’s a bad time to buy a home and 73% of respondents expecting year-over-year mortgage rate spikes — both percentages represented record highs for the survey.

“Additionally, consumer perception regarding the ease of getting a mortgage also decreased across nearly all surveyed segments this month, suggesting to us that the benefit of the recent past’s historically low mortgage rate environment appears to have diminished, and affordability is poised to become an even greater constraint going forward,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “This sentiment is consistent with our forecast of decelerating home sales through the rest of 2022 and into 2023.”

Photo: F. Muhammad / Pixabay

© 2022 Benzinga does not provide investment advice. All rights reserved.

Read at Benzinga

Read the original article on Benzinga

Housing Beat: Mortgage Rates Keep Climbing As Inventory Levels Slowly Expand

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email