Average rate on a 30-year mortgage falls slightly, easing borrowing costs for home shoppers
The rate fell to 6.89% from 6.95% last week, mortgage buyer
The average rate has mostly hovered around 7% this year — more than double what it was just three years ago. The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have put off many home shoppers this year, extending the nation’s housing slump into its third year.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell this week, pulling the average rate down to 6.17% from 6.25% last week. A year ago, it averaged 6.30%,
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest-rate policy and the moves in the 10-year
The yield, which topped 4.7% in late April, has been generally declining since then on hopes that inflation is slowing enough to get the Fed to lower its main interest rate from the highest level in more than two decades.
“Following June’s jobs report, which showed a cooling labor market, the 10-year
On Thursday, the yield was down to 4.18% in midday trading in the bond market after a new update on inflation raised expectations that the central bank will soon begin lowering its benchmark rate.
Fed officials have said that while inflation has moved closer to the central bank's target level of 2% in recent months, they want to see more data supporting that trend before moving to cut rates.
Most economists expect the Fed’s first rate cut to come in September, with potentially another cut by year’s end.
Until the Fed begins lowering its short-term rate, long-term home loans are unlikely to budge significantly from where they are now. Still, mortgage rates could generally ease in coming weeks if bond yields continue declining in anticipation of a Fed rate cut.
“Although volatile, we should see 10-year
Record-high home prices and a rising, but still historically limited, supply of properties on the market discouraged many would-be homebuyers this spring, traditionally the busiest period of the year for the housing market.
Sales of previously occupied
Many prospective homebuyers, was well as homeowners looking to sell, have been holding out for mortgage rates to come down.
Despite forecasts calling for mortgage rates to ease in coming months, most economists expect the average rate on a 30-year home loan to remain above 6% this year.
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