Mortgage rates fell again this week after falling nearly half a point last week.
The average rate on 30-year fixed-rate mortgages for the week ending November 23 was 6.58%, down from 6.61% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.10%.
Mortgage rates have been on the rise for most of 2022 as the Federal Reserve’s (Fed’s) unprecedented rate-hiking campaign was meant to curb skyrocketing inflation. But interest rates plunged last week amid reports suggesting inflation may finally have peaked.
“This volatility makes it difficult for potential homebuyers to know when they will enter the market,” said Sam Cater, chief economist at Freddie Mac. It’s reflected in the latest data showing that it’s slowing down in the band.
Average mortgage interest rates are based on mortgage applications received by Freddie Mac from thousands of lenders nationwide. The study includes only borrowers with a 20% down payment and good credit. However, many buyers with low upfront payments or poor credit will pay more than the average rate.
Usually, Freddie Mac’s weekly average rates on Thursdays are released a day earlier due to the Thanksgiving holiday.
Mortgage rates tend to track 10-year US Treasury yields. When investors see or anticipate rate hikes, yields move higher and mortgage rates move higher.
10-year Treasuries have traded in a low range of 3.7% to 3.85% since two inflation reports were released almost two weeks ago showing prices rose at a slower pace than expected in October. . Realtor.com chief his economist Daniel Hale says this has significantly reset investor expectations for future rate hikes. Prior to that, the 10-year Treasury was above 4.2%.
But markets may be a little too fast to celebrate an improvement in inflation, she said.
At the Fed’s November meeting, Chairman Jerome Powell pointed to the need for continued interest rate hikes to keep inflation in check.
“This could mean that mortgage rates could rise again, and that risk increases if inflation rises next month,” Hale said.
Timing the market for low mortgage rates is difficult, but many homebuyers see a window of opportunity.
“After rising mortgage rates generally throughout 2022, the recent favorable move for buyers is welcome, with median home buyers paying when interest rates were above 7%. We could be saving over $100 a month compared to deaf money, just two weeks ago,” said Hale.
Both purchase and refinancing applications rose slightly last week as a result of lower mortgage rates. But refinancing activity is still more than 80% below last year’s pace, when interest rates were around 3%, according to the Mortgage Bankers Association’s weekly report.
But with the week-to-week fluctuations in mortgage rates about three times the average seen in a typical year and home prices still historically high, many potential shoppers are pulling back, Hale said. has said.
“Despite an increasing number of homes on the market, a long-term housing shortage has kept home prices high and could make it more difficult for buyers and sellers to match price expectations. there is potential,” she said.
In a separate report released Wednesday, the U.S. Department of Housing and Urban Development and the U.S. Census Bureau said new home sales in October were up 7.5% from September but down 5.8% from a year ago.
This is higher than expected, bucking the recent trend of declining sales, but still below what it was a year ago. Home construction has been historically weak over the past decade, and builders have pulled back as the housing market shows signs of slowing.
“New home sales beat expectations, but given high mortgage rates and builders’ pessimism, a reversal of the general downtrend is unlikely so far,” said Robert Frick, corporate economist at the Navy Federal Credit Union. suspicious,” he said.
Despite the general trend of declining sales, new home prices remain at record highs.
The average price of a new home is $493,000, up 15% from a year ago. This is the best price ever.