The declining mortgage-rate streak continued, though the 30-year, fixed-rate drop from the prior last week’s 6.28% to last week’s 6.27% was relatively small.
NEW YORK – The average long-term U.S. mortgage rate inched down for the fifth straight week, positive news for potential homebuyers and a real estate market that’s been chilled by the Federal Reserve’s series of interest rate hikes the past year.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate ticked down to 6.27% from 6.28% the previous week. The average rate last year at this time was 5%.
The average long-term mortgage rate hit 7.08% in the fall – a two-decade high.
The recent decline in mortgage rates is good news for prospective homebuyers, many of whom were pushed to the sidelines during the past year as the Federal Reserve raised its main lending rate nine straight times in a bid to beat back stubborn, four-decade high inflation.
Though supply remains low, home prices are retreating slightly, another development that could lure buyers back into the market. The national median home price slipped 0.2% from February last year to $363,000, marking the first annual decline in 13 years, according to the National Association of Realtors.
Rising borrowing costs can add hundreds of dollars a month in costs for homebuyers and cooled off a red-hot housing market. Before surging 14.5% in February, sales of existing homes had fallen for 12 straight months to the slowest pace in more than a dozen years.
In 2022, existing U.S. home sales fell 17.8% from 2021, the weakest year for home sales since 2014 and the biggest annual decline since the housing crisis began in 2008, the National Association of Realtors reported earlier this year.
In their latest quarterly economic projections, Fed policymakers forecast that they expect to raise that key rate just once more – from its new level of about 4.9% to 5.1%, the same peak they had projected in December.
While the Fed’s rate hikes do impact borrowing rates across the board for businesses and families, rates on 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investor expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.
Treasury yields have fluctuated wildly since the collapse of two mid-size U.S. banks last month. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, was at 3.41% Thursday but had been above 4% early in March.
The rate for a 15-year mortgage, popular with those refinancing their homes, fell last week to 5.54% from 5.64% the prior week. It was 4.17% one year ago.
By Matt Ott. Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
