Mortgage rates retreat after wild ride, offering buyers a break

Rates for home loans ticked down after throttling to their highest in more than seven years as investors piled into safe-haven assets.

The 30-year fixed-rate mortgage averaged 4.56% during the May 31 week, down 10 basis points, Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 4.06%, down from 4.15%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.80%, down seven basis points.

Mortgage rates move alongside the benchmark 10-year U.S. Treasury note  , which has rallied as fears of a eurozone breakup have resurfaced. When investors pile into safe-haven assets, it sends their prices higher and yields lower.

It was the biggest weekly move for the 30-year fixed-rate mortgage since April 26.

While mortgage rates have been higher nearly every week of this year compared with 2017, that hasn’t dented demand for home loans. The Mortgage Bankers Association’s weekly index, shown in the chart above, demonstrates how applications for purchase — not refinance — mortgages have held tough.

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Freddie Mac’s chief economist, Sam Khater, said that continued demand comes thanks to “confident American consumers,” but housing industry participants worry that the lopsided supply-demand dynamics of the housing market, coupled with rising rates, may take ownership out of reach of many would-be buyers.