Despite the interest rate increase announced by the FED on May 4, 2022, mortgage rates have declined slightly as of the date this is being written. However, when put into the larger perspective, they have increased.
Compared to a week ago, the mortgage rates were as follows:
Loan term Rate Change Rate last week
30-Year Mortgage Rate 5.54% 0.04% 5.50%
15-Year Fixed-Rate 4.76% 0.02% 4.74%
30-Year Jumbo Mortgage Rate 5.45% 0.07% 5.38%
5/1 ARM Rate 3.78% 0.11% 3.67%
While interest rates are no longer at the historic lows of the past few years, as this graph from the Federal Reserve shows, they are not as high as they have been in recent years.
Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; May 5th, 2022
While this is not the news would-be homeowners like to hear, there is the possibility that there is a silver lining to this dark cloud. As interest rates go up, particularly mortgage interest rates, the demand for homes subsides. A mortgage rate increase will usually lower the price of homes on the market or slow the rate of price acceleration.
The lack of available homes for sale, low mortgage interest rates, and the high demand for housing have contributed to the rapid rise in home sales prices in recent years. The move by the FED to increase interest rates is viewed by many in the housing industry as a good thing.