Today's Mortgage Rates - 05/21/2022

Fixed mortgage rates eased slightly this week.

As reported by Freddie Mac, the average offered interest rate for a conforming 30-year fixed-rate mortgage decreased by five basis points (0.05%), slipping to 5.25%. After a steep run-up for much of the winter and spring, 30-year FRM rates have managed to level off over the last few weeks. Of late, shorter-term FRMs have settled a bit more; the average offered rate for conforming 15-year fixed rate mortgages also declined by five basis points (0.05%) to 4.43%, a second consecutive easing. Short-term interest rates continue to trend upward in response to and anticipation of forthcoming Fed moves, and the initial fixed rate for a 5/1 Hybrid ARM continued higher this week, rising by a full tenth of a percentage point to (0.10%) to 4.08%.

Financial markets continue to be buffeted by all manner of issues. Recently, concerns about higher inflation (which would tend to bring higher market rates and an even more aggressive Fed) have been tempered by concerns that economy may slow more than anticipated or even slip into recession as inflation and higher interest rates take their toll. Some poor earnings reports from major retailers this week surprised investors; in turn, money flowed out of stocks and partly into a more defensive position in bonds, lowering yields and helping fixed mortgage rates to stabilize.

The effect of higher mortgage rates and declining affordability have started to show in the latest reports on housing. Existing home sales for April dropped by 2.4%, a third consecutive decline, with the 5.61 million annualized rate of sale the lowest since January 2020 (excluding the initial three months of the pandemic). The slowing in sales has improved the availability of homes to buy; these increased to 2.2 months of supply at the current sales pace. However, additional supply did little to help reduce the pace of home prices increases; the median price of a home sold in April was 14.8% above the same month a year ago.

Existing homes sales that closed in April represent transactions that began 30 to 60 days prior. With both home prices and mortgage rates high, "It looks like more declines are imminent in the upcoming months," noted Lawrence Yun, Chief Economist of the National Association of Realtors, the provider of existing-home sales data. Between mid-March and the end of April, thirty-year fixed mortgage rates rose by nearly another full percentage point, and the housing market appears to be slowing quickly.

Mortgage rates have the potential to be slightly lower in the days ahead, but are still subject to sharp swings, as has been the case of late.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.