Mortgage rates remain below 3%, but this may not keep home buyers in the market.

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Mortgage rates last week tended to rise slightly, but remained below 3%. However, there is growing evidence that homebuyers are leaving the property market, likely due to the low supply of properties for sale.

30-year fixed rate mortgages averaged 2.99% for the week ending June 3, up four basis points from the previous week, Freddie Mac
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-2.08%

reported

The 15-year fixed rate mortgage remained stable at 2.27% per annum. The five-year adjustable rate mortgage, indexed by the Treasury, averaged 2.64%, up five basis points from the previous week.

Typically, mortgage rates are roughly the same as the yield on 10-year Treasuries.
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1,537%

Long-term bond yields changed last week as investors awaited key data on the state of the economy.

Despite slight growth, mortgage rates remain at historically low levels. For comparison: at this time last year, 30-year credit averaged 3.18%. But a low-rate environment doesn’t give homebuyers the same incentive it used to.

“While interest rates remain affordable and about 20 basis points lower than last year, double-digit home price increases over the past 10 months have pushed average listing prices to a new all-time high, resulting in $ 150 higher monthly mortgage payments. than at the same time in 2020, ”said George Ratiu, Senior Economist at Realtor.com.


“Double-digit home price increases over the past 10 months have pushed average listing prices to a new all-time high, resulting in monthly mortgage payments $ 150 higher than in the same period in 2020.”


– George Ratiu, Senior Economist at Realtor.com

(Realtor.com is operated by Move Inc., a subsidiary of News Corp, and MarketWatch is a division of Dow Jones, which is also a division of News Corp.)

There are still not enough houses for sale. To complicate matters further, buyers who plan to live in the home they are buying face not only competition from each other, but also from investment funds that are buying up homes across the country for rent.

Some shoppers seem to call it quitting. According to the Association of Mortgage Bankers, the number of mortgage applications has been falling for two weeks in a row. Overall, mortgage applications fell to their lowest level since February 2020, although this decline also reflects the downturn in refinancing applications as mortgage rates rose from record lows.

Those who stay in the market to buy a home may soon face higher rates – though this will depend on the monthly employment report for May.

“Last month’s report was widely regarded as a disappointment, signaling to markets that the economic recovery may be slower than previously anticipated – and the uncertainty it introduced helped prevent significant increases in mortgage rates in the coming weeks,” he said. Matthew Speakman, Economist with Zillow
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+ 0.43%

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+ 0.59%

If the May report turns out to be strong, as expected, Mortgage rates are likely to rise due to investor pressure, Speakman said.

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