On Thursday, Freddie Mac reported a slight decrease in the average rate on the benchmark 30-year home loan, ending a seven-week upward trend. The rate dropped from 7.79% to 7.76%, providing a small respite in an increasingly unaffordable housing market. Just one year ago, the rate was at 6.95%, according to Freddie Mac’s chief economist, Sam Khater.
Despite this minor drop, the current rate on a 30-year mortgage remains more than double that of two years ago. This surge has led to rising costs for borrowers and deterred homeowners from selling properties. Rates for 15-year fixed-rate mortgages, favored by refinancing homeowners, held steady at 7.03%.
The escalation in mortgage rates and home prices has resulted in a four-month decline in sales of previously occupied homes across the U.S. This is due to the high interest rates and inflated home prices discouraging homeowners from selling, thereby increasing borrowers' monthly costs.
Mortgage rates have been following the trajectory of the 10-year Treasury yield, which lenders use to price loans. Last week, following the Federal Reserve's decision to keep its main interest rate unchanged, the yield fell to 4.63% from over 5%. This decision by the Federal Reserve contributed to the slight decrease in mortgage rates this week.
The recent dip in mortgage rates offers only scant relief to prospective buyers grappling with an intensifying housing market. The ongoing challenges of high interest rates and inflated home prices continue to add pressure on both buyers and sellers in the U.S. housing market.
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