Mortgage rates fell to their lowest level in more than a year in a welcome sign for the beleaguered housing market.
The average rate on a 30-year loan with a fixed interest rate fell this week to 6.47% — down from 6.73% last week, according to a survey by mortgage broker Freddie Mac.
At this time last year, the average 30-year rate was 6.96%.
It was the second straight weekly decline in the average rate, i.e now the lowest it has been since mid-May last year when it was 6.39%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell this week, pulling the average rate down to 5.63% from 5.99% last week.
A year ago, it averaged 6.34%, Freddie Mac said.
Mortgage rates have increased as the Federal Reserve raises interest rates to combat stubbornly high inflation.
Last week, Fed Chairman Jerome Powell said the Fed would keep its key interest rate unchanged at a 23-year high of 5.3% — but said cuts “may be on the table” when central bankers next meet on Sept. 17-18. .
The higher prices have hindered the plans of prospective homeowners to buy property for the first time.
Homeowners who have lived in properties purchased with mortgages from the pre-pandemic period are paying much lower prices – making them less likely to put their homes on the market.
This has led to a limited supply – causing housing prices to rise.
“The decline in mortgage rates is increasing potential homebuyers’ purchasing power and should begin to pique their interest in making a move,” Sam Khater, Freddie Mac’s chief economist, told the AP.
“Furthermore, this drop in prices is already giving some existing homeowners the opportunity to refinance.”
The lower mortgage rates combined with signs of easing inflation have fueled expectations that the Fed will cut rates next month.
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