Average long-term interest rates 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 10 straight months 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 mortgage rates and double mortgage rates have made buying a home less affordable for many people, but recent rate cuts may make it more affordable for some. Real estate is a new concept.
“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 consumer prices have declined for the sixth straight month, Fed officials have indicated 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 rates, global demand for US Treasurys and what the Federal Reserve does to interest rates can also affect the cost of borrowing for a house
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.