According to a recent report by mortgage buyer Freddie Mac, the average rate on a 30-year mortgage has dipped below 7% for the first time since mid-April.
This marks the third consecutive week of decline in mortgage rates.
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The big picture: The new rate is 6.94%, down from 7.02% the previous week. Comparatively, the rate was 6.57% a year ago.
- The decline in mortgage rates is seen as a positive development for homebuyers, considering the current housing market’s challenges, such as rising prices and limited property availability.
- Borrowing costs for 15-year fixed-rate mortgages, popular for refinancing, also decreased from 6.28% to 6.24% this week. In comparison, the rate was 5.97% a year ago.
Driving the news: Mortgage rates are influenced by several factors, including the performance of the bond market, the Federal Reserve’s interest rate policy, and movements in the 10-year Treasury yield, which serves as a benchmark for determining home loan prices.
- Treasury yields have been declining since Federal Reserve Chair Jerome Powell’s statement that the central bank is more likely to cut interest rates rather than increase them. However, the Fed has emphasized that it will only consider rate cuts once it is confident that inflation is slowing sustainably towards its 2% target.
Go deeper: Although the rates have dipped below 7%, they remain significantly higher than two years ago when they were at 5.25%. The sharp increase in rates last month was an unwelcome development for prospective homebuyers during the busiest time of year for home sales.
