Buyers find relief as mortgage rates decline for the third consecutive week.
- Category: News
For the third consecutive week, mortgage rates have experienced a decline, providing a welcome respite for homebuyers who are mindful of their budgets.
There is a possibility of further easing, with some experts suggesting that rates may have already reached their peak for the year. According to Freddie Mac’s report on Thursday, the average rate on the 30-year fixed mortgage dropped from 7.50% to 7.44% in the previous week. Nevertheless, rates have remained consistently above 7% for the past three months, marking a trend not observed in 22 years.
The shift in rates follows a government report this week revealing lower-than-expected inflation in October. While Federal Reserve Chair Jerome Powell has not ruled out the potential for another rate hike in December, the Fed’s commitment to data dependency has instilled hope among traders and housing experts.
The Expert’s Opinion:
Jiayi Xu, an economist at Realtor.com, expressed optimism, stating, “Recent incoming data, such as that from this week, is making a rate hike far less likely. Mortgage rates are likely to continue dropping, as they have in recent weeks.” Elevated rates have posed challenges to homebuyers’ affordability in recent times, deterring homeowners from listing their properties and making home prices unattainable for some. However, there is a belief among experts that the worst of the rate increases may be behind us.
Daryl Fairweather, Chief Economist at Redfin, expressed hope for a positive trajectory, stating, “I certainly hope so. Anything could happen with new data prints. Hopefully, we continue to get more good news about inflation cooling, and that continues to be good news for mortgages.”
While mortgage demand for purchases experienced a boost, reaching its highest level in five weeks as rates edged lower, a full recovery remains elusive. According to data from the Mortgage Bankers Association (MBA), purchase applications increased by 3% on a seasonally adjusted basis for the week ending Nov. 10. However, this figure still lagged behind by 12% compared to the same week a year earlier, underscoring the slow pace of recovery in the housing market.
Interest rates dropped. What happens to the housing market?
Downshift in Mortgage Rates:
Last week, rates experienced a downward shift following a monthly jobs report that fell below expectations, reinforcing the Federal Reserve’s decision to maintain its benchmark interest rate in the range of 5.25% to 5.5%, where it has stood since July. This decision marked the second consecutive meeting in which Fed officials opted to keep rates stable, following a series of 15 rate hikes.
However, the challenges faced by homebuyers extend beyond just rates, as a shortage of inventory persists, keeping home prices at elevated levels. Daryl Fairweather, Chief Economist at Redfin, emphasized that while this development might prompt some individuals to consider making a move and securing a rate, it’s not anticipated to be a significant turning point. Mortgage rates, despite the recent decline, remain notably higher than the previous year, contributing to a slowdown in sales and signaling a gradual recovery in the housing market.
