Mortgage Rates in the US Decline, Easing Affordability Concerns

Mortgage rates in the US have declined, offering some relief to homebuyers facing affordability challenges. According to Freddie Mac, the average rate for a 30-year fixed loan was 6.79%, down from 6.87% last week.

While borrowing costs have not exceeded 7% since early December, they remain significantly higher than early 2022 levels, before the Federal Reserve began raising its benchmark rate. The central bank has indicated that the first rate reduction is likely to occur this year, pending further inflation and jobs data.

Despite the elevated mortgage rates and rising prices, more homeowners are listing their properties for sale, raising hopes for a more stable market in the future. Contracts to purchase previously owned homes increased by 1.6% in February nationwide, although they declined in high-cost areas of the Northeast and West, according to the National Association of Realtors.

Sam Khater, Freddie Mac’s chief economist, noted, “Mortgage rates moved slightly lower this week, providing a bit more room in the budgets of some prospective homebuyers. We also are seeing encouraging data on existing-home sales, which reflects improving inventory. Regardless, rates remain elevated near 7% as markets watch for signs of cooling inflation, hoping that rates will come down further.”