Mortgage rates drop for second straight week as recession fears grow

U.S. mortgage rates are down for the second consecutive week as investors seek a safe haven amid escalating recession worries.

Freddie Mac's latest Primary Mortgage Market Survey released Thursday shows the average rate on a 30-year fixed mortgage is now at 5.3%. The reading is down from last week's 5.7% average, but still up sharply from a year ago when the 30-year fixed rate sat at 2.9%.

The 15-year fixed rate also fell to 4.45%, down from the prior week's average of 4.83% and up from 2.2% the same week last year.

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"Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise," said Sam Khater, Freddie Mac’s chief economist. 

"While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown," he added.

As economic data points to an increased likelihood of a recession, rattled investors are retreating to U.S. Treasurys. Mortgage rates are linked to the 10-year Treasury yields, and fall with them in tandem.

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But mortgage rates remain up sharply since the beginning of the year, and the recent declines may do little to shore up demand in a cooling real estate market as more would-be buyers are priced out due to high home prices.

U.S. households are also feeling added pressure on their budgets due to soaring inflation, which sits at a 40-year high.

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Consumer sentiment hit a record low last month as Americans' assessments of their personal financial situations tumbled.