Average long-term US mortgage rate fell to 6.42% this week, Real Estate News, ET Real Estate

Average long-term U.S. mortgages fell for a second week in a row, which combined with declining home prices could give house hunters a break and boost the housing market as the spring buying season begins.

mortgage buyer Freddie Mac The benchmark 30-year rate fell to 6.42% from 6.6% last week, reported Thursday. The average rate a year ago was 4.42%.

Even though financial markets are worried about the recent bank collapse and the Fed raised its benchmark lending rate by 25 basis points on Wednesday, some economists believe there is light at the end of the tunnel for the downtrodden housing market. Could

“On the homebuyer front, the news is more positive with an improvement in purchase demand and stability in home prices,” said Sam Khater, chief economist at Freddie Mac. “If mortgage rates continue to decline over the next few weeks, look for a sustained rebound during the first weeks of the spring home buying season.”

A big increase in mortgage rates last year — which can add hundreds of dollars a month to costs for home buyers — chilled the housing market. Sales of existing homes fell for 12 straight months at their slowest pace in more than a dozen years, before rising 14.5% in February.

In 2022, existing US home sales are set to fall 17.8% from 2021, the weakest year for home sales since 2014 and the largest annual decline since the housing crisis began in 2008, the National Association of Realtors said earlier this year. reported.

But there has been some good news for those seeking to relocate recently: The national median home price fell 0.2% from last February to $363,000, according to the NAR, the first annual decline in 13 years.

The average long-term rate hit 7.08% in the fall – a two-decade high – as the Federal Reserve raised its key lending rate to cool the economy and stabilize four-decade high inflation.

In their latest quarterly economic projections, policymakers indicated they expect to raise that key rate just one more time — to their new level of about 4.9% to 5.1%, the same peak they projected in December. Was.

While Fed rate hikes affect lending rates for businesses and households, rates on 30-year mortgages typically track movements in the 10-year Treasury yield, which lenders use as a guide for pricing loans. Let’s use Investor expectations for future inflation, global demand for US Treasuries and what the Federal Reserve does with interest rates can also affect the cost of borrowing for a home.

Treasury yields have fluctuated wildly since the collapse of two mid-sized US banks two weeks ago, with the 10-year falling as low as 3.47% on Thursday. The 10-year yield reached 5.07%, its highest level since 2007, before the bank collapsed.

The rate for the 15-year mortgage, popular with those refinancing their homes, also came down again this week, to 5.68% from 5.9% last week. A year ago it was 3.63%.