Mortgage Interest Rates Dropped In May

Mortgage interest rates dropped in May compared to April, according to the Federal Housing Finance Agency's Monthly Interest Rate Survey.

Specifically, the average contract rate for a mortgage for an existing home was 4.18%, down from 4.23% in April. The contract rate on the composite of all mortgage loans, including refinances, was 4.13%.

Interest rates are typically locked in 30-45 days before a loan is closed, so the May data reflect market rates from mid- to late-April.

The effective interest rate, which includes fees over the life of the mortgage, for May was 4.28%, down 10 basis points from 4.38% in April.

The average interest rate on a conventional, 30-year, fixed-rate mortgage of $417,000 or less was 4.37%, a decrease of 16 basis points compared to April.

The average loan amount for all loans was $282,600 – down $1,200 from $283,800 in April.

Earlier this week, the National Association of Realtors reported that existing-home sales rose 4.9% in May, compared to April – the largest monthly increase since August 2011. Despite the increase, existing-home sales were still about 5% below the 5.15-million-unit level seen in May 2013. What's more, most of the increase was in high-end luxury homes priced $1 million or more.

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