This week, the average 30-year mortgage rate in the United States decreased once further, reaching its lowest point since late October.
Mortgage buyer Freddie Mac reported on Thursday that the rate had decreased from 6.81% to 6.69% from the previous week. The average rate was 7.03% a year ago.
This week also saw a decrease in the cost of borrowing for 15-year fixed-rate mortgages, which are common among homeowners looking to refinance their home loan to a lower rate. From 6.1% the previous week, the average rate dropped to 5.96%. According to Freddie Mac, it averaged 6.29% a year ago.
Changes in the yield on U.S. 10-year Treasury notes, which lenders use as a benchmark when pricing house loans, are one of the many variables that affect mortgage rates.
The 30-year mortgage average rate is currently at its lowest point since it was 6.54% on October 24.
Since falling to a two-year low of 6.08% in late September when the Federal Reserve lowered its benchmark interest rate from a two-decade high for the first time in more than four years, mortgage rates have primarily been rising in recent weeks. Although the central bank does not determine mortgage rates, changes in the 10-year Treasury yield are influenced by its operations as well as the direction of inflation.
When the Fed meets in two weeks, many anticipate that it will lower its main interest rate once more.
Many prospective homeowners have been unable to afford homeownership due to high mortgage rates and growing housing prices. Home sales in the United States are expected to have their worst year since 1995.
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Applications for house loans have been increasing even though mortgage rates have generally increased since September. After accounting for the Thanksgiving break, mortgage applications increased 2.8% last week, according to the Mortgage Bankers Association.
Additionally, last week saw the MBA’s seasonally adjusted index of purchase loan applications increase for the fourth consecutive week, to its highest level since January.
According to Joel Kan, MBA’s deputy chief economist, the current surge in purchase activity is still going strong because of lower interest rates and larger inventory levels, which are providing potential buyers with more options than they had earlier in the year.
Still, many prospective homeowners are probably waiting for mortgage rates to drop even more in the upcoming months because home prices are close to all-time highs and are still rising nationally, albeit more slowly.
However, considering that many home analysts expect the average rate on a 30-year mortgage would typically linger around 6.5% next year, there might not be much comfort.
Many of those purchasers will still be priced out, according to Lisa Sturtevant, chief economist at Bright MLS, since home prices are predicted to increase and interest rates are predicted to stay in the sixes until 2025.
–The Associated President Alex Veiga
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