The average long-term U.S. mortgage rate fell for the fifth week in a row, more good news for prospective homebuyers grappling with an increasingly unaffordable housing market. The latest decline brought the average rate on a 30-year mortgage down to 7.22% from 7.29% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.49%.
Quick Read
- Decline in Mortgage Rates: The average long-term U.S. mortgage rate has dropped for the fifth consecutive week, bringing the rate on a 30-year mortgage to 7.22%, down from 7.29% last week.
- Historical Comparison: Compared to a year ago, when the rate averaged 6.49%, the current rate is significantly higher. It’s at its lowest in 10 weeks, matching mid-September levels when it was 7.19%.
- Market Impact: This recent decline in rates is seen as positive for potential homebuyers, with Freddie Mac’s chief economist noting a shift in market sentiment and an increase in purchase application activity.
- Rates Still High Compared to Recent Years: Despite the recent drops, the average rate on a 30-year home loan is still much higher than two years ago when it hovered around 3%.
- Impact on Buyers and Homeowners: Higher rates have added substantial costs for borrowers and discouraged homeowners who got lower rates two years ago from selling.
- Recent Highs and Monthly Payments: The rate had surpassed 6% in September 2022 and reached 7.79% in late October, the highest since late 2000. This increase pushed the median monthly payment on home loan applications in October to $2,199, up 9.3% from a year earlier.
- Increase in Loan Applications: The decrease in rates has recently led to a slight rise in home loan applications.
- Housing Market Slowdown: The housing market has been sluggish this year due to high rates and low home supply. Sales of previously occupied homes have decreased significantly compared to 2022.
- 15-Year Mortgage Rates: The average rate on 15-year fixed-rate mortgages also fell this week to 6.56% from 6.67%.
- Influence of Treasury Yield: Mortgage rates have been dropping alongside the 10-year Treasury yield, which is a benchmark for pricing loans. The yield has decreased recently, fueling speculation that the Federal Reserve may cut rates in response to easing inflation.
The Associated Press has the story:
Average long-term US mortgage rate falls to 7.22%, lowest level since Sept.
Newslooks- LOS ANGELES (AP)
The average long-term U.S. mortgage rate fell for the fifth week in a row, more good news for prospective homebuyers grappling with an increasingly unaffordable housing market.
The latest decline brought the average rate on a 30-year mortgage down to 7.22% from 7.29% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.49%.
The average rate on a 30-year mortgage is now at the lowest level it’s been in 10 weeks, when it was 7.19%.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” said Sam Khater, Freddie Mac’s chief economist. “The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels.”
While the recent string of rate declines are welcome news for would-be homebuyers, the average rate on a 30-year home loan remains sharply higher than just two years ago, when it was around 3%.
Higher rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already out of reach for many Americans. They also discourage homeowners who locked in rock-bottom rates two years ago from selling.
The average rate on a 30-year home loan climbed above 6% in September 2022 and has remained above that threshold since. In late October, it climbed to 7.79%, the highest level on records going back to late 2000. That helped push up the median monthly payment listed on home loan applications in October to $2,199, a 9.3% increase from a year earlier, the Mortgage Bankers Association reported Thursday.
In the weeks since, however, the pullback in rates has spurred more buyers off the sidelines. Home loan applications rose a seasonally adjusted 0.3% last week from the previous week, the MBA said.
The elevated mortgage rates and a near-historic-low supply of homes on the market have held back the housing market this year. Sales of previously occupied U.S. homes, which slumped in October to their slowest pace in more than 13 years and are down 20.2% through the first 10 months of the year versus the same period in 2022.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loan, also declined this week, with the average rate falling to 6.56% from 6.67% last week. A year ago, it averaged 5.76%, Freddie Mac said.
Rates have been declining in recent weeks along with the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield, which just a few weeks ago was above 5%, its highest level since 2007, has fallen amid hopes that inflation has cooled enough to pave the way for the Federal Reserve to cut rates.
The yield on the 10-year Treasury was at 4.32% in midday trading Thursday, up from 4.26% late Wednesday.
