Mortgage rates fell for the fourth consecutive week to the lowest level since early May, mortgage buyer Freddie Mac said Thursday.
Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage fell to 6.77% from last week's reading of 6.81%.
The average rate on a 30-year loan was 6.86% a year ago.
A "For Sale" sign is posted outside a residential home in the Queen Anne neighborhood of Seattle. (Reuters/Karen Ducey / Reuters)
"Borrowers should find comfort in the stability of mortgage rates, which have only fluctuated within a narrow 15-basis point range since mid-April," said Sam Khater, Freddie Mac’s chief economist. "Although recent data show that home sales remain low, the resulting available inventory provides homebuyers with a wider range of options to consider when entering the market."
The average rate on a 30-year loan was 6.86% a year ago. (Photographer: Loren Elliott/Bloomberg via Getty Images / Getty Images)
The average rate on the 15-year fixed mortgage fell to 5.89% from last week's reading of 5.96%. One year ago, the rate on the 15-year fixed note averaged 6.16%.
The lower rates, while welcome news, come as a new report said affordability in just three of America’s 50 top metro areas is such that households that make the median income can scoop up a home that will not go above 30% of their yearly earnings.
Realtor.com said it determined the three major metro areas where the 30% rule – one in which potential homebuyers limit their mortgage payment to 30% of their monthly income – remains feasible by "using a standard 20% down payment and May’s average mortgage rate of 6.82%." It also factored in tax and insurance.
The average rate on the 15-year fixed mortgage fell to 5.89% from last week's reading of 5.96%. (Steve Pfost/Newsday RM via Getty Images / Getty Images)
Those metro areas were Pittsburgh, Pennsylvania; Detroit-Warren-Dearborn, Michigan; and St. Louis, Missouri, the real estate marketplace said.
Median annual household incomes in those cities were $72,935, $72,493 and $79,869, respectively, according to the report.
Nationwide, Realtor.com found roughly 44.6% of income would be necessary for a household to be capable of financially handling a "median-priced" home.
"Earnings have risen, but homebuying costs have risen faster, which means that adhering to affordability guidelines can feel challenging if not impossible in many housing markets across the country," said Realtor.com chief economist Danielle Hale.