Mortgage rates fell again this week, after falling nearly half a percentage point last week.
According to Freddie Mac, 30-year fixed-rate mortgages averaged 6.58% in the week ending November 23, down from 6.61% the week before. A year ago, the 30-year fixed rate was 3.10%.
Mortgage rates have been rising for most of 2022, spurred by the Federal Reserve’s unprecedented campaign of rate hikes to tame soaring inflation. But last week, interest rates fell amid reports that inflation may have finally peaked.
“This volatility makes it difficult for potential homebuyers to know when to enter the market and that is reflected in the latest data showing sales,” said Sam Khater, chief economist at Freddie Mac. Existing home sales are slowing at all price points.
The average mortgage rate is based on mortgage applications Freddie Mac receives from thousands of lenders across the country. The survey only included borrowers who made a 20% deposit and had good credit. But many buyers who pay less upfront or have sub-perfect credit will pay more than average.
Average weekly rates, usually published by Freddie Mac on Thursdays, will be published one day earlier due to the Thanksgiving holiday.
Mortgage rates tend to track yields on 10-year US Treasuries. When investors see or anticipate rising interest rates, they make moves that drive yields higher and mortgage rates up.
The 10-year Treasury note has fluctuated in a lower range of 3.7% to 3.85% since a pair of inflation reports showed prices rising at a slower-than-expected pace in October. announced almost two weeks ago. That has led to a big shift in investors’ expectations for future rate hikes, said Danielle Hale, chief economist at Realtor.com. Prior to that, 10-year Treasuries rose above 4.2%.
However, the market may be in a bit of a hurry when inflation improves, she said.
At the Fed’s November meeting, Chairman Jerome Powell pointed to the need for continued rate hikes to tame inflation.
“This could mean mortgage rates could rise again, and that risk increases if next month’s inflation is at a higher level,” Hale said.
While it’s difficult to time the market for low mortgage rates, many homebuyers are seeing an opportunity.
“After generally higher mortgage rates throughout 2022, the recent pro-buyer trend is welcome and could help the average homebuyer save more than $100 per month over the they have to pay when the interest rate is above 7%. just two weeks ago,” Hale said.
As mortgage rates fell, both buy and refinance applications rose slightly last week. But refinancing activity is still 80 percent below last year’s pace when interest rates were around 3 percent, according to the Mortgage Bankers Association’s weekly report.
However, with weekly swings in mortgage rates averaging almost three times the levels seen in a typical year, and home prices remaining at historic highs, many potential shoppers have retreated. , Hale said.
“Long-term housing shortages are keeping home prices high, even as the number of homes on the market has increased, and it could be more difficult for buyers and sellers to do,” she said. in adjusting price expectations.
In a separate report released Wednesday, the U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported that new home sales rose in October, up 7.5% from the previous year. with September, but down 5.8% from a year ago.
While that number was higher than expected and trumped the recent sales decline, it was still lower than a year ago. Home construction has been at historic lows for a decade and builders have retreated as the housing market shows signs of slowing.
“New home sales beat expectations, but the current overall downward trend is unlikely to reverse due to high mortgage rates and sentiment,” said Robert Frick, chief business economist at Navy Federal Credit Union. of builders”.
Despite the overall trend of falling sales, new home prices remain at record highs.
The median price for a newly built home was $493,000, up 15% from a year ago – the highest price on record.
