Mortgages

Average long-term US mortgage rate snaps five-week string of increases, but remains above 7%


The average rate on a 30-year mortgage fell for the first time in four weeks, a slight relief for home shoppers already facing the challenges of rising housing prices and a shortage of homes for sale

LOS ANGELES — The average rate on a 30-year mortgage fell for the first time in four weeks, a slight relief for home shoppers already facing the challenges of rising housing prices and a shortage of homes for sale.

The rate fell to 7.09% from 7.22% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.35%.

The modest pullback followed a five-week string of increases that pushed the average rate to its highest level since November 30. When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much homebuyers can afford.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also declined this week, pulling down the average rate to 6.38% from 6.47% last week. A year ago, it averaged 5.75%, Freddie Mac said.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Treasury yields have largely been easing since Federal Reserve Chair Jerome Powell said last week that the central bank remains closer to cutting its main interest rate than hiking it, despite a string of stubbornly high readings on inflation this year. A cooler-than-expected jobs report on Friday, meanwhile, suggested the U.S. economy could still pull off the delicate balancing act of avoiding getting too cold or too hot.

Still, the Fed has maintained it doesn’t plan to cut interest rates until it has greater confidence that price increases are slowing sustainably to its 2% target.

Until then, mortgage rates are unlikely to ease significantly, economists say.

After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage stayed below 7% this year until last month. Even with the modest decline this week, it’s well above where it was just two years ago at 5.3%.

The recent upward push in rates has been an unwelcome development for prospective homebuyers in the midst of what’s traditionally the busiest time of the year for home sales. On average, more than one-third of all homes sold in a given year are purchased between March and June.

Sales of previously occupied U.S. homes fell last month as homebuyers contended with elevated mortgage rates and rising prices.



Source link

Leave a Response