Mortgage rates fell for the second week in a row, but economists are not expecting any significant declines in the near future.
Freddie Mac's latest Primary Mortgage Market Survey released Thursday showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.74% this week from 6.88% last week. The average rate on a 30-year loan was 6.60% a year ago.
The average rate on the 15-year fixed mortgage also fell to 6.16% after coming in last week at 6.22%. One year ago, the rate on the 15-year fixed note averaged 5.90%.
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"The 30-year fixed-rate mortgage decreased again this week, with declines totaling almost a quarter of a percent in two weeks’ time," said Sam Khater, Freddie Mac’s chief economist. "Despite the recent dip, mortgage rates remain high as the market contends with the pressure of sticky inflation. In this environment, there is a good possibility that rates will stay higher for a longer period of time."
The drop in rates has boosted home-purchase applications leading into the typically bustling spring season, but demand remains well below where it was a year ago as elevated rates and record-high home prices continue to keep buyers and sellers out of the market.
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The Mortgage Bankers Association's (MBA) index of mortgage applications jumped 7.1% for the week ended March 8, compared with a 9.7% increase the previous week, according to new data published Wednesday.
Still, application volume is down 11% compared with the same time last year.
With no relief in sight from mortgage rates or soaring home prices, the housing affordability crisis appears to be set in, for now. That leaves potential home buyers weighing their options.
"As the spring heats up, some buyers may hold off in the hopes that mortgage rates move lower, but either choice (buying now or waiting) comes with tradeoffs," said Realtor.com senior economic analyst Hannah Jones.
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"Spring buyers may see higher mortgage rates, but summer buyers are likely to see higher home prices, and uncertainty around mortgage rates," Jones added.
FOX Business' Megan Henney contributed to this report.
