The drop in mortgage rates, which have now fallen for three consecutive weeks, is good news for homebuyers who have been struggling for years with the affordability of property across the country, an expert has told Newsweek.
The 30-year fixed-rate, the most popular mortgage among American borrowers, fell to an average of 7.44 percent in the week ending on November 16, last Thursday, down from 7.5 percent the week before.
The 15-year fixed-rate mortgage averaged 6.76 percent, down from the previous week when it was 6.81 percent.
An American flag flies near new home construction at a housing development in the Phoenix suburbs on June 9, 2023 in Queen Creek, Arizona. A drop in mortgage rates is good news for homebuyers, an expert told Newsweek.MARIO TAMA/GETTY IMAGES
"For the third straight week, mortgage rates trended down, as new data indicates that inflationary pressures are receding," said Sam Khater, Freddie Mac's chief economist. "The combination of continued economic strength, lower inflation and lower mortgage rates should likely bring more potential homebuyers into the market."
Jessica Lautz, deputy chief economist and vice president of research for the National Association of Realtors (NAR), told Newsweek that this drop in mortgage rates is the market's reaction to recent statements from the Federal Reserve.
"The Fed has seen that inflation has eased and has paused its rate hikes, which have been having a ripple effect on the mortgage market," she said.
While the Fed does not set mortgage rates directly, its policies have an immediate impact on them. Since the central bank started its aggressive campaign against inflation last year, mortgage rates have ballooned—making the purchase of a home even harder for homebuyers struggling with skyrocketing prices.
The U.S. inflation picture has been improving in recent months, with consumer prices rising at the slowest pace in two years last month, according to October's Consumer Price Index as calculated by the U.S. Bureau of Labor Statistics.
"Overall, this is very good news for homebuyers," Lautz said.
"They are still facing higher rates than they did a couple of years ago, but the trajectory that is expected for mortgage rates is to head into the 6-percent range by spring," she continued. "And that would be very good for homebuyers, especially first-time homebuyers who have been facing a very difficult homebuying environment and do not have housing equity."
Will Homebuyers' Good Luck Continue Next Year?
While Lautz said that it's still possible that the Fed will still hike rates one more time in December, she "would hope that the Fed is watching these numbers and stop the rate hikes."
If so, mortgage rates could fall even further next year, though that's unlikely to happen quickly.
Comments