US Mortgage Rate Hits 7.44% in Third Weekly Decline

The benchmark 30-year home loan experienced a third consecutive weekly decline, marking a favorable turn for prospective buyers navigating a housing market constrained by elevated prices and a scarcity of available properties.

Freddie Mac’s report indicated a reduction in the average rate on a 30-year mortgage from 7.5% to 7.44% this week, a noticeable decrease compared to the 6.61% average recorded a year ago. These fluctuations in mortgage rates significantly impact borrowers, potentially limiting their purchasing power in an already challenging market, while dissuading existing homeowners, who secured significantly lower rates previously, from entering the selling market. The intersection of escalating mortgage rates and soaring home prices has significantly slowed sales of previously owned U.S. homes, plunging to their lowest pace in over a decade by September.

The prevailing economic strength, coupled with declining inflation rates and the recent decrease in mortgage rates, is expected to attract more potential homebuyers to the market, according to Sam Khater, Freddie Mac’s chief economist. The current average rate on a 30-year mortgage is presently at its lowest in an eight-week period, resting at 7.31%.

Moreover, the interest rates on 15-year fixed-rate mortgages, popular among homeowners seeking refinancing options, saw a decline, dropping to 6.76% from the previous 6.81%, a substantial increase from the 5.98% recorded a year earlier.

Since breaching the 6% threshold in September 2022, the average rate on a 30-year home loan has persistently stayed above that mark, reaching 7.79% three weeks ago, marking the highest average since late 2000. Recent increases in rates have paralleled movements in the 10-year Treasury yield, a key parameter guiding loan pricing. Fluctuations in investor expectations regarding future inflation, international demand for U.S. Treasurys, and Federal Reserve policy decisions significantly influence these mortgage rates.

As of midday Thursday, the 10-year Treasury yield was recorded at 4.47%, a marginal decrease from the previous day’s 4.54% and a notable reduction from the levels above 5% seen just last month, marking its highest point since 2007.