Homebuyers Get a Glimmer of Hope Amidst Rising Mortgage Rates
This week, the average 30-year mortgage rate in the United States experienced its first uptick in seven weeks, reaching 6.12%. Although this marks a slight increase from last week’s 6.08%, it’s still a far cry from the 7.49% average seen just a year ago. The recent dip in rates had brought a welcome boost to home shoppers, offering them more purchasing power in a market where prices are hovering near all-time highs.
For those looking to refinance their home loan, the average rate on 15-year fixed-rate mortgages rose to 5.25%, up from 5.16% last week. However, this is still significantly lower than the 6.78% average seen a year ago.
Mortgage rates are heavily influenced by the bond market’s reaction to the Federal Reserve’s interest rate policy decisions, which in turn affect the 10-year Treasury yield. This yield serves as a guide for lenders when pricing home loans. As of Thursday, the 10-year Treasury yield stood at 3.82%, up from 3.78% last week.
Despite this week’s increase, the average 30-year mortgage rate has been trending downward since May, when it peaked at 7.22%. The Federal Reserve’s recent decision to cut its main interest rate for the first time in over four years has contributed to this decline, with further cuts expected in the coming years.
According to Freddie Mac Chief Economist Sam Khater, the bigger picture looks more promising for prospective homebuyers. “With mortgage rates down one and a half percentage points over the past year, home price growth slowing, inventory increasing, and incomes on the rise, the outlook for homebuyers this fall is improving and should continue through the rest of the year,” Khater said.
After rising from below 3% in September 2021 to a 23-year high of 7.8% last October, mortgage rates have been on a downward trajectory. As rates decrease, they can save borrowers hundreds of dollars per month. The housing market, which has been experiencing a sales slump since 2022, may finally be poised for a turnaround. While economists expect mortgage rates to remain steady for the remainder of the year, Fannie Mae predicts a decline to an average of 5.7% in the same quarter next year.
Leave a Reply