The average long-term U.S. mortgage rate fell for the fourth time in as many weeks, more positive news for prospective homebuyers who have been held back by sharply higher borrowing costs and heightened competition for relatively few homes for sale.
Quick Read
- U.S. long-term mortgage rates have fallen for the fourth consecutive week, providing some relief for prospective homebuyers.
- The average rate for a 30-year mortgage dropped to 7.29% from 7.44% last week, compared to 6.58% a year ago.
- Despite this decrease, current rates are still significantly higher than the approximately 3% rate two years ago.
- High mortgage rates increase borrowing costs, making home buying less affordable and discouraging current homeowners from selling.
- The U.S. housing market is experiencing a slump in sales of previously occupied homes, with a 20.2% decline through the first 10 months of 2023 compared to the same period in 2022.
- Freddie Mac’s chief economist notes that potential buyers are waiting for further rate reductions and increased housing inventory.
- The average rate on a 30-year home loan has consistently been above 6% since September 2022.
- The rate for 15-year fixed-rate mortgages also declined this week to 6.67%, compared to 6.76% last week and 5.9% a year ago.
- Mortgage rates are falling in tandem with the 10-year Treasury yield, which is used as a benchmark for loan pricing.
- Recent decreases in the yield, influenced by hopes of cooling inflation and potential Federal Reserve rate cuts, have led to lower borrowing costs.
The Associated Press has the story:
Average long-term US mortgage rate falls to 7.29%, 4th-straight weekly drop
Newslooks- LOS ANGELES (AP)
The average long-term U.S. mortgage rate fell for the fourth time in as many weeks, more positive news for prospective homebuyers who have been held back by sharply higher borrowing costs and heightened competition for relatively few homes for sale.
The latest decline brought the average rate on a 30-year mortgage down to 7.29% from 7.44% last week, mortgage buyer Freddie Mac said Wednesday. A year ago, the rate averaged 6.58%.
Despite the recent pullback, the average rate on a 30-year home loan is still 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 far lower rates two years ago from selling.
The elevated mortgage rates and a near-historic-low supply of homes on the market have stymied sales of previously occupied U.S. homes, which slumped in October to their slowest pace in more than 13 years and have now fallen 20.2% through the first 10 months of the year versus the same period in 2022.
“In recent weeks, rates have dropped by half a percent, but potential homebuyers continue to hold out for lower rates and more inventory,” said Sam Khater, Freddie Mac’s chief economist.
The average rate on a 30-year home loan climbed above 6% in September 2022 and has remained above that threshold since. Just four weeks ago, it averaged 7.79% — the highest average on record going back to late 2000. The average rate is now at the lowest level it’s been in nine weeks, when it was 7.19%.
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 6.67% from 6.76% last week. A year ago, it averaged 5.9%, 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 4.42% in midday trading Wednesday, up from 4.40% late Tuesday.
