For the past seven weeks, mortgage rates have continually decreased. This trend began in late October when the rate reached its highest point since 2000 at 7.79%.
Real estate agents across the country are encouraging prospective buyers to think about a possible “buy now, refinance later” approach.
In the United States, the average long-term mortgage rate has recently dropped below 7%, which is the lowest rate since the beginning of August. This may be beneficial to those looking to buy a home, as the recent surge in borrowing costs and the limited amount of properties on the market have been very difficult to contend with.
Freddie Mac reported on Thursday that the rate for a 30-year mortgage has decreased from the previous week’s 7.03% to 6.95%. This rate is higher than it was a year ago when it averaged 6.31%.
Mortgage rates on 15-year fixed loans, commonly used by those refinancing their home loan, rose this week, lifting the average to 6.38% from 6.29% in the prior week. This rate was 5.54% one year ago, according to Freddie Mac.
Over the past seven weeks, mortgage rates have been steadily declining after achieving a peak of 7.79% in late October, which was the highest rate since the year 2000.
The drop has been resemblant of the dip in the yield of 10-year Treasury, which is utilized by lenders to set loan costs. This yield, that reached its peak in mid October since 2007, has been decreasing due to optimism that inflation has decreased sufficiently allowing the Federal Reserve to stop raising interest rates.
The aspirations of many were further bolstered Wednesday when the Federal Reserve maintained the same level of its main interest rate for the third consecutive time.
The outlook of investors regarding inflation, the demand for U.S. Treasurys on the global stage, and the Fed’s handling of the federal funds rate can all have an effect on mortgage rates.
Economist experts predict that if inflation continues to decrease and the Federal Reserve Board remains true to its plan to decrease the federal funds target rate, a gradual thawing of the housing market can be expected in the coming year.
Last year’s sudden surge in mortgage rates caused borrowing costs to increase and decreased the maximum amount of money homebuyers can spend on a house, while home prices have continued to rise due to a serious lack of housing available. This has had a detrimental effect on sales of U.S. homes that have already been occupied, resulting in a 20.2% decrease in the first 10 months of this year.
Last week, the Mortgage Bankers Association reported that mortgage applications have been on the rise for the past six weeks – a trend that is being welcomed by prospective homebuyers due to the recent decrease in mortgage rates.
The 30-year mortgage rate is much higher than it was two years ago when it was 3.12%. This disparity is having an effect on the amount of homes available for sale, as homeowners who got excellent rates back then are disinclined to put their homes on the market.
