U.S. Mortgage Rates Record Largest Dive Since 2008

Mortgage rates fell for the second week in a row, the greatest drop since December 2008.

Photo Insert: The 30-year fixed-rate mortgage averaged 5.30 percent in the week ending July 7, down from 5.70 percent the previous week.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 5.30 percent in the week ending July 7, down from 5.70 percent the previous week. That is still much higher than this time last year, when it was 2.90 percent, according to CNN Business' Anna Bahney.

Rates jumped dramatically at the start of the year, peaking at 5.81 percent in mid-June. However, economic concerns have pushed them down since then. The 40 basis point drop helped to offset some of the hefty rate hikes in May and June.

"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.

However, purchasing a home remains difficult. According to Joel Berner, Realtor.com's senior economic research analyst, mortgage rates are at their highest levels since the late 2000s, while listing prices have increased by more than 8.5 percent year over year for 24 consecutive months.

If there is a silver lining for homebuyers, it is that more homes are coming on the market, according to him. Active listings surged by the most in the history of Realtor.com data in June.

"With more homes on the market, sellers are being forced to compete on prices," he said.

"Though the cost of financing a home remains high relative to recent years, buyers will have more chances to find homes in their price range as the undersupplied and overheated housing market starts to cool."

Higher interest rates are also dampening demand among prospective purchasers. According to the Mortgage Bankers Association, mortgage applications fell 5.4 percent in the week ending July 1 compared to the previous week.

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