Mortgage rates drop slightly for first time in weeks

Mortgage rates decreased for the first time in seven weeks, edging down slightly but up significantly from last year, according to the latest data from Freddie Mac.

The 30-year fixed-rate mortgage dropped to 5.1% annual percentage rate (APR) for the week ending April 28. This is down from 5.11% last week but up from 2.98% last year. 

Unlike the 30-year loan, rates for 15-year mortgages increased to an average 4.4%. This is up from 4.38% last week and 2.31% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also increased to 3.78%, up from 3.75% last week and 2.64% last year.

Homeowners looking to reduce their monthly payments can try refinancing their mortgage to a lower interest rate. Visit Credible to find your personalized interest rate without affecting your credit score.

HOMEBUYERS STRUGGLE WITH AFFORDABILITY AMID RISING PRICES AND INTEREST RATES: REPORT

Rising home prices and interest rates make it harder for homebuyers

The rise in home prices and interest rates have made conditions more difficult for borrowers as affordability worsens. 

"The combination of swift home price growth and the fastest mortgage rate increase in over forty years is finally affecting purchase demand," Freddie Mac Chief Economist Sam Khater said. "Homebuyers navigating the current environment are coping in a variety of ways, including switching to adjustable-rate mortgages, moving away from expensive coastal cities, and looking to more affordable suburbs. We expect the decline in demand to soften home price growth to a more sustainable pace later this year."

Homebuyers are paying significantly more on their monthly payments when they buy a home this year, versus the same amount they would have paid last year. 

"Real estate markets are shifting under the weight of record-high prices and rising mortgage rates," George Ratiu, Realtor.com's manager of economic research, said. "This is leaving many homebuyers unable to get a foot in the homeownership door due to being priced out of the market. Buyers of a median-price home are looking at a monthly mortgage payment that is almost 50% higher than it was a year ago, adding an extra $560 to their monthly expenses. It is not surprising that many are stepping back from the market, hoping that conditions will improve."

If you are looking to buy a home, comparing multiple lenders can help ensure you get the best mortgage interest rate. Visit Credible to compare multiple mortgage lenders at once and choose the one with the lowest rate for you.

FHA ADDS 40-YEAR MORTGAGE OPTION FOR THOSE RECOVERING FROM COVID-19 FORBEARANCE

Inflation could worsen, pushing interest rates higher

Inflation increased 8.5% annually in March, its highest rate in 40 years, according to the latest Consumer Price Index (CPI) from the Bureau of Labor Statistics (BLS).

As a result, food prices could be elevated for years to come, similar to the inflation surge seen in the 1970s, according to one economist. And as inflation rises, the Federal Reserve could raise interest rates again in order to combat inflation. 

Considering inflation and other factors, "the outlook for economic growth is darkening, which may affect the U.S. economy," Ratiu said. "Additionally, commodity prices are feeling another shock from supply chain disruptions due to the war in Ukraine. 

"This has led the World Bank to project elevated food prices for several years to come and the prospect of stagflation for the world economy, a reality not seen since the 1970s," he continued. "Inflation is likely to run at a fast pace for longer than expected, keeping pressure on mortgage rates for the medium term."

If you are interested in lowering your mortgage rate, you could consider taking out a refinance. To see if this is the right option for you, contact Credible to speak to a home loan expert and get all of your questions answered.

 Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.