30-year fixed mortgage rates have reported their biggest drop in just over a year, according to a Freddie Mac statement. The average for 30-year, fixed loans was 6.35%, down from 6.5% last week. Meanwhile, the average 15-year fixed mortgage rate is now 5.55%.
“The 30-year fixed-rate mortgage fell 15 basis points from last week, the largest weekly drop in the past year,” Sam Khater, Freddie Mac’s chief economist, said in a release. “Mortgage rates are headed in the right direction and homebuyers have noticed, as purchase applications reached the highest year-over-year growth rate in more than four years.” Today’s economic indicators of growing inflation, mixed with rising jobless claims and shrinking Treasury yields could put interest rates in a holding pattern in the near-term.
The average 30-year fixed rate mortgage (FRM) hit a record weekly low of 2.65% on Jan. 7, 2021, and a record weekly high of 8.89% on Dec. 16, 1994, according to Freddie Mac data. Mortgage rates track the 10-year Treasury yield, which fell this week, trading at the lowest levels since April, causing the mortgage rate dip. Despite the dip though, house purchase appear stalled, likely due to growing costs and weak jobs market.
Also Read: Bank of America Projects Fed to Cut Interest Rates Twice This Year
Even with mortgage rates falling, affordability gains may be limited, said Lisa Sturtevant, chief economist at Bright MLS, since national home prices have continued climbing since the spring. “For real affordability gains, we need to see both a drop in mortgage rates and much slower price growth, or even home price declines,” she said. Sturtevant added that a drop below 6.5% in mortgage rates may have “an important psychological effect” on buyers, enticing them back into the market.