Current:Home > StocksAverage rate on a 30-year mortgage falls to 6.20%, its lowest level since February 2023-DB Wealth Institute B2 Reviews & Ratings
Average rate on a 30-year mortgage falls to 6.20%, its lowest level since February 2023
lotradecoin withdrawal limits explained View Date:2024-12-25 17:57:33
The average rate on a 30-year mortgage in the U.S. fell this week to its lowest level in 19 months, reflecting a pullback in Treasury yields ahead of an expected interest rate cut from the Federal Reserve next week.
The rate fell to 6.20% from 6.35% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.18%.
The average rate is now the lowest it’s been since February 12, 2023, when it was 6.12%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also eased this week. The average rate fell to 5.27% from 5.47% last week. A year ago, it averaged 6.51%, Freddie Mac said.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Fed’s interest rate policy decisions. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Signs of waning inflation and a cooling job market have raised expectations that the Fed will cut its benchmark interest rate for the first time in four years at its meeting of policymakers next week.
The yield, which topped 4.7% in late April, has pulled back sharply since then in anticipation of a Fed rate cut. It was at 3.68% in midday trading in the bond market Thursday.
“Rates continue to soften due to incoming economic data that is more sedate,” said Sam Khater, Freddie Mac’s chief economist. “But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages.”
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has hovered around 7% for most of this year. That’s more than double what it was just three years ago.
The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have put off many would-be homebuyers, extending the nation’s housing slump into its third year.
Sales of previously occupied U.S. homes are running below last year’s pace, though they ended a four-month slide in July as homebuyers seized on more attractive mortgage rates.
Despite the sales slump, home prices have kept rising, pushing the limits of what homebuyers can afford. The national median home sales price rose in July on an annual basis for the 13th month in a row to $422,600, just shy of the all-time high set in June, according to the National Association of Realtors.
Lower mortgage rates would help boost home shoppers’ purchasing power. But many economists’ forecasts call for the average rate on a 30-year home loan to remain above 6% this year.
“Prospective homebuyers expecting mortgage rates to drop dramatically after the Fed cuts rates will be disappointed,” said Lisa Sturtevant, chief economist at Bright MLS. “The impact of the Fed lowering short-term rates has already been largely baked into mortgage rates, which have been falling since early July. High home prices and a lack of supply continue to be driving affordability challenges in the market.”
veryGood! (81)
Related
- Gena Rowlands, acting powerhouse and star of movies by her director-husband, John Cassavetes, dies
- Arizona legislation to better regulate rehab programs targeted by Medicaid scams is moving forward
- Fast-moving fire damages commercial freighter at Ohio port, but no injuries reported
- A fourth Albuquerque, New Mexico, police officer has resigned amid probe of unit
- Giants trading Jordan Phillips to Cowboys in rare deal between NFC East rivals
- Former Tesla worker settles discrimination case, ending appeals over lowered $3.2 million verdict
- Interest in TikTok, distressed NY bank has echoes of Mnuchin’s pre-Trump investment playbook
- Kelly Ripa’s Trainer Anna Kaiser Wants You to Put Down the Ozempic and Do This to Stay Fit
- Red Cross blood inventory plummets 25% in July, impacted by heat and record low donations
- GOP Kentucky House votes to defund diversity, equity and inclusion offices at public universities
Ranking
- The president of Columbia University has resigned, effective immediately
- Judge appoints special master to oversee California federal women’s prison after rampant abuse
- Steelers trade QB Kenny Pickett to Eagles, clearing way for Russell Wilson to start, per reports
- Bradley Cooper and Gigi Hadid Seal Their Romance With a Kiss in New PDA Photo
- Traveling? Here Are the Best Life-Saving Travel Accessories You Need To Pack, Starting at Just $7
- Former Tesla worker settles discrimination case, ending appeals over lowered $3.2 million verdict
- Bradley Cooper and Gigi Hadid Seal Their Romance With a Kiss in New PDA Photo
- Mother of boy found dead in suitcase in Indiana arrested in California
Recommendation
-
Charlie Sheen’s Daughter Sami Sheen Undergoes Plastic Surgery for Droopy Nose
-
Dr. Dre Shares He Suffered 3 Strokes After 2021 Brain Aneurysm
-
Sam Bankman-Fried deserves 40 to 50 years in prison for historic cryptocurrency fraud, prosecutors say
-
Céline Dion Shares Rare Photo With Her 3 Sons Amid Health Battle
-
The State Fair of Texas is banning firearms, drawing threats of legal action from Republican AG
-
Host, radio station apologize for 'offensive' quip about South Carolina star Kamilla Cardoso
-
What to know about mewing: Netflix doc 'Open Wide' rekindles interest in beauty trend
-
Teen gets 40 years in prison for Denver house fire that killed 5 from Senegal