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Wednesday, August 16, 2023 at a residence in Hercules, California, USA.
Washington DC
CNN
—
Mortgage rates fell this week, marking the biggest one-week drop since November last year. Interest rates fell for the second consecutive week after rising for seven consecutive weeks.
30-year fixed-rate mortgages fell from an average of 7.76% to 7.50% in the week ending Nov. 9. previous weekaccording to Freddie Mac data released Thursday.
A year ago, the average 30-year fixed rate hit 7.08%, the highest level in 2022, but the following week, rates fell by 47 basis points. This week’s index fell 26 basis points from the previous week.
“30-year fixed-rate mortgages fell by a quarter of a percent as Treasury yields fell, the biggest one-week decline since November,” said Sam Cater, chief economist at Freddie Mac. said.
“Newly available data shows that household debt continues to rise, primarily due to mortgage, credit card and student loan balances,” he said. “Unless mortgage rates fall significantly, the housing market will remain stagnant as many consumers feel burdened by the high cost of living.”
Average mortgage rates are based on mortgage applications received by Freddie Mac from thousands of lenders nationwide. The survey included only borrowers with a 20% down payment and good credit.Current buyer rate It might be different.
Homebuyers have been shocked by soaring interest rates, causing a significant drop in mortgage applications and home sales.Sales hit Lowest price in 13 years in September That’s because buyers paused their home searches and waited for more inventory and lower mortgage rates.
However, the number of loan applications rose 2.5% from the previous week as mortgage interest rates fell last week, according to the Mortgage Bankers Association. Applications for mortgages to buy homes increased by 3%.
“Applications for both purchase and refinance loans increased this week but remained low,” said Joel Kang, vice president and deputy chief economist at MBA. “The purchase index remains more than 20% behind last year’s pace as many homebuyers remain on the sidelines until more inventory for sale becomes available.”
of Federal Reserve Decision Last week’s monetary policy decision to keep interest rates unchanged was good news for homebuyers struggling with soaring mortgage rates, but the Fed’s options for further rate hikes remain on the table.
“Further economic data is needed to determine whether current policy is ‘restrictive enough’ to bring inflation back to normal.” [Fed’s] The goal is 2%,” said Jiayi Xu, an economist at Realtor.com.
Although the Fed does not directly set the interest rates that borrowers pay on their mortgages, its actions do affect borrowers. Mortgage rates tend to be tied to the yield on the 10-year U.S. Treasury, which fluctuates based on a combination of expectations of what the Fed will do, what the Fed actually does, and investor reaction. As Treasury yields rise, mortgage interest rates also rise. When interest rates fall, mortgage rates tend to follow suit.
On the other hand, Mr. Xu said: October employment statistics, which one Moderate increase in employment revealed Reducing wage pressures could increase confidence among policymakers that the economy will continue to ease without the need for further Fed rate hikes in the coming months. The Fed’s last rate-setting meeting of the year is scheduled for December 12-13.
“With the possibility of rate hikes still on the table, investors are likely to be cautious in their positioning and expectations for rate rises.” [mortgage] Interest rates will continue to be flat to slightly higher,” Xu said.
Homebuyers are getting a little bit of a reduction in interest rates. Out-of-reach situations reach new heights.
Median home prices in October were about the same as last year, according to Realtor.com, but mortgage rates that have been above 7% since mid-August have significantly increased the cost of financing a typical home purchase. doing. .
The monthly cost of buying a home has increased by more than $166. That’s a 7.4% increase over the previous year, and a new record for year-over-year increases in the cost of buying a home, Realtor.com found.
But Lisa Sturtevant, chief economist at Bright Multiple Listing Service, said that while mortgage rates remain relatively high, the gap between current rates and a year ago has narrowed.
“In many ways, market conditions are similar to the situation last November,” he said. “The difference is that consumers are adjusting their expectations for mortgage rates.”
“Many buyers are under pressure and will act quickly if interest rates fall,” he said. “Other prospective home buyers will wait until the new year, hoping for lower interest rates and increased inventory.”
He said that while interest rates are expected to fall in 2024, they are not expected to return to pandemic levels.
“We are entering a new era in mortgage rates, and prospective homebuyers can expect interest rates to settle above 6%,” Sturtevant said.