US mortgage rates eased for the third week in a row, with the average 30-year rate falling to 6.6%, according to Freddie Mac. This is the lowest level since October 24.
The decline in mortgage rates is partly due to firm consumer income growth and a bullish stock market, which have increased homebuyer demand. However, prospective homebuyers still face stiff affordability headwinds due to elevated mortgage rates and rising home prices.
The Federal Reserve’s actions and inflation trajectory influence the 10-year Treasury yield, which has been hovering around 4.2% this month. Many economists expect the Fed to cut its main interest rate again at its policy meeting next week, potentially further easing mortgage rates.
As a result, mortgage applications have risen for the fifth straight week, with refinance loan applications climbing 27%. Home shoppers are taking advantage of the recent pullback in home-loan borrowing costs, but many may not be satisfied until mortgage rates ease further. Housing economists predict that the average rate on a 30-year mortgage will remain above 6% next year.
Freddie Mac’s chief economist Sam Khater noted that while the outlook for the housing market is improving, it is limited by affordability challenges. The recent decline in mortgage rates follows a mostly upward climb since September, when the average rate slid to a two-year low of 6.08%.
Source: https://fortune.com/2024/12/12/mortgage-rates-going-down-us-home-sales-on-track-worst-year-since-1995