The average long-term mortgage interest rate in the United States has fallen for the ninth straight week, hitting its lowest level since May.
Mortgage buyer Freddie Mac announced today that its average interest rate on 30-year mortgages has dropped to 6.61% from 6.67% last week. The average interest rate a year ago was 6.42%.
Borrowing costs for 15-year fixed-rate mortgages, which are popular among homeowners refinancing their mortgages, also edged lower this week, with the average interest rate dropping to 5.93% from 5.95% the previous week. A year ago, the average was 5.68%, Freddie Mac said.
“As we enter the new year, the economy remains strong with solid growth, a tight labor market, slowing inflation, and an initial recovery in the housing market,” said Freddie Mac Chief Economist Sam Cater. Ta.
Mortgage rates have eased since late October, with the average rate on a 30-year mortgage reaching 7.79%, the highest level since late 2000.
The decline followed the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield, which rose to its highest level since 2007 in mid-October, has fallen on expectations that inflation has cooled enough for the Fed to cut rates after sharply raising them since March 2022.
The Federal Reserve has chosen not to move interest rates in its past three meetings, also providing a boost to financial markets.
Investor expectations for future inflation, global demand for U.S. Treasuries, and what the Federal Reserve does with the benchmark federal funds rate could affect mortgage rates.
A sharp rise in mortgage rates that began early last year has increased the cost of borrowing a home loan and discouraged potential home buyers, even as home prices continue to rise as the supply of real estate in the market remains low. The amount you can pay has decreased. This weighed on sales of previously occupied US homes by 19.3% through the first 11 months of 2023.
Despite recent declines, the average interest rate on a 30-year mortgage is still significantly higher than just two years ago, when it was 3.11%. The wide gap between current and then-current interest rates has deterred homeowners who locked in the lowest interest rates two years ago from selling, leaving the inventory of homes for sale low.
Some housing economists expect home sales to increase next year, assuming mortgage rates ease further.