Stable rates and rising inventory fuel 18% annual jump in purchase applications
The 30-year fixed-rate mortgage averaged 6.81% for the week ending May 15, marking the 17th consecutive week it remained under the 7% threshold, according to Freddie Mac’s latest weekly survey.
“Stable mortgage rates coupled with moderately rising inventory are attracting homebuyers into the market, with purchase application activity up 18% from last year,” said Sam Khater, chief economist at Freddie Mac.
The current average of 6.81% is slightly up from 6.76% the previous week. A year ago, the 30-year rate was slightly higher at 7.02%. Meanwhile, the 15-year fixed-rate mortgage rose to 5.92% from 5.89% last week. This time last year, it was at 6.28%.
Despite recent upward movement, some analysts highlight a broader pattern of consistency.
“Mortgage rates edged upward after the Fed hinted that it won't be in a hurry to cut interest rates this summer,” Holden Lewis, home and mortgage expert at NerdWallet. “Zooming out, mortgage rates have been remarkably steady for the last month. Sure, rates are higher than borrowers prefer, but buyers are reassured by stability.”
Rate volatility eases
After a turbulent start to April, driven by market reactions to US tariff announcements, rates stabilized toward the end of the month. Data from Optimal Blue shows the benchmark OBMMI 30-year conforming fixed rate fluctuated between 6.48% and 6.98% in the first 10 days of April before settling at 6.7% by month’s end, about 10 basis points above where it began.
“Last month’s report showed early signs of spring homebuyer activity, and April confirms the season is underway with a solid increase in purchase locks,” said Brennan O’Connell, director of data solutions at Optimal Blue. “We also saw a shift toward FHA loans, often used by first-time or credit-challenged buyers, and away from non-conforming products, possibly reflecting investor caution in response to broader economic uncertainty.”
FHA loan share climbed to 20.2% in April, up 50 basis points from March. Conversely, non-agency lending dropped by 46 basis points to 16.4%. The conforming loan share dipped slightly to 51%, and VA share declined to 11.8%. USDA volume remained unchanged at 0.6%.
Rates for government-backed loans also saw increases in April. FHA rates rose 17 basis points to 6.44%, VA rates increased 9 basis points to 6.28%, and jumbo loans edged up 11 basis points to 6.84%.
Adjustable-rate mortgages (ARMs) gained traction, accounting for 10.34% of total lock volume in April, up from just under 9% in March, as some borrowers sought out more affordable financing options.
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