WASHINGTON (AP) – The average long-term U.S. mortgage rate fell this week to its lowest level since September, a further improvement in a housing market that has slumped for nearly a year. .
Mortgage broker Freddie Mac reported Thursday that the average 30-year mortgage rate fell to 6.15% from 6.33% last week. Last year the average rate was 3.56%.
The long-term interest rate hit a two-decade high of 7.08% in the fall as the Federal Reserve continued to increase its key lending rate in its quest to stabilize the economy and reduce inflation.
A sharp rise in mortgage rates over the past year has taken a toll on the housing market, with existing home sales falling for the 10th straight month at the lowest level in more than a decade.
Although house prices have retreated due to falling demand, they are still almost 11% higher than last year. High rates and doubling of mortgage rates have made buying a home less affordable for many people, but recent rate cuts are still possible. Home buyers have new hope.
“Prices are at their lowest level since September of last year, increasing demand from home buyers and builders,” said Sam Khater, the chief economist of Freddie Mac. “Decreasing prices are giving a big boost to the housing market, but the supply of housing remains a concern.”
At its last meeting of 2022, the Federal Reserve raised its interest rate to 0.50 percent, its seventh increase in the past year. That pushed the central bank’s key rate between 4.25% and 4.5%, its highest level in 15 years.
Although the consumer price index has declined for the sixth straight month, Fed officials have indicated that they may raise the central bank’s key lending rate. in the next three-quarters of the matai in 2023, which will be between 5% and 5.25%.
Rates for 30-year mortgages typically track the Treasury’s 10-year performance, which lenders use as a guide to loan pricing. Investors’ expectations for future inflation, global demand for US Treasurys and what the Federal Reserve does with interest rates can also affect the cost of borrowing for a home.
The rate for a 15-year mortgage, popular with those who refinanced their homes, was also lowered this week, to 5.28% from 5.52% last week. It was 2.79% last year.