The rate fell to 6.87% from 6.95% last week, mortgage buyer
This is the third straight weekly decline in the average rate, which has mostly hovered around 7% since April. Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing options.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also eased this week, lowering the average rate to 6.13% from 6.17% last week. A year ago, it averaged 6.03%,
“Mortgage rates fell for the third straight week following signs of cooling inflation and market expectations of a future Fed rate cut,” said
Home loan rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy and the moves in the 10-year
Yields have mostly eased recently following some economic data showing slower growth, which could help keep a lid on inflationary pressures and convince the
Until the Fed begins lowering its short-term rate, long-term mortgage rates are unlikely to ease significantly, economists say.
Even then, mortgage rates “are likely to remain well above the 3.5% to 5% range that prevailed in the decade before the pandemic,” said
The average rate on a 30-year mortgage remains near a two-decade high, discouraging many would-be homebuyers. The elevated rates contributed to a lackluster spring homebuying season. Sales of previously occupied
Another factor constraining the housing market is a tight supply of homes for sale. While it has risen this year, partly because properties are taking longer to sell, the inventory of homes on the market remains well below its pre-pandemic levels. A major factor is many homeowners who bought or refinanced more than two years ago are reluctant to sell now and give up their fixed-rate mortgages below 3% or 4% — a trend real estate experts refer to as the “lock-in” effect.
As of the end of last year, more than 50% of homes with a mortgage had a rate that was 4% or lower, and 87% had a rate at 6% or lower, according to Realtor.com.
"While it’s unlikely for mortgage rates to fall below 4%, a rate around 6% could strongly motivate many sellers to list their homes, thereby increasing overall inventory and exert downward pressure on housing prices,” Xu said.
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