Mortgage rates in U.S. fall again, hit 6.09%

Mortgage rates in U.S. fall again, hit 6.09%

Mortgage rates in the U.S. fell for a fourth straight week.

The average for a 30-year, fixed loan was 6.09%, down from 6.13% last week, Freddie Mac said in a statement Thursday.

Mortgage costs have come down almost a full percentage point from their recent high, giving hope to some would-be homebuyers looking for a way into a deal. The bidding wars that marked the pandemic housing rally have cooled, and prices are expected to moderate further in the coming months. Still, with listings in short supply, affordability hurdles remain.

The decline in rates, after peaking in November at 7.08%, “can allow as many as 3 million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” Sam Khater, Freddie Mac’s chief economist, said in the statement.

The Federal Reserve on Wednesday announced a 25 basis-point hike to its benchmark interest rate, slowing the pace of its drive to tame inflation. While the Fed’s efforts appear to be working, Chair Jerome Powell said the central bank has “more work to do.”

The Fed controls short-term rates, but long-term rates, including 30-year mortgages, “are a function of market expectations for the path of the economy,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “Investors are betting that the economic slowdown and the Fed’s eventual victory over inflation will result in lower rates over time.”

The bankers group sees mortgage rates falling modestly in 2023, ending the year around 5%.

Markets pile on more big gains as tech stocks rise

Wall Street’s bang to start the year got even bigger Thursday, as tech stocks and a surge for Facebook’s parent company led the market higher.

The S&P 500 rallied 1.5% a day after hitting its best level since August. The Nasdaq composite soared 3.3%, while the Dow Jones Industrial Average lagged because it has less of an emphasis on tech. It slipped 39 points, or 0.1%.

Meta helped lead the way with a 23.3% leap after it reported better revenue for the latest quarter than analysts expected and said it expects to spend less this year than earlier forecast. While its latest profit fell short of expectations, Facebook’s parent also announced a program to buy back $40 billion of its stock.

Stocks had already been on the upswing through the start of the year on hopes that the Federal Reserve may be set to pause soon on its hikes to interest rates. Such increases help stamp out inflation but also hurt the economy and investment prices.

On Wall Street, big jumps for several Big Tech stocks helped lift the market ahead of their earnings reports, which came after trading closed for the day. Amazon and Google’s parent company, Alphabet, both jumped more than 7%, while Apple rose 3.7%.

Each tumbled back in afterhours trading, though, after releasing results seen as disappointing by investors. Because these stocks are among the biggest by value, their movements carry more sway on the S&P 500 and other indexes.

Big tech companies have announced high-profile layoffs recently, but a report on Thursday suggested job cuts are not that widespread. Fewer workers applied for unemployment benefits last week than expected, and the number dropped to its lowest level since April.

Treasury yields were holding steady Thursday after falling in earlier days, an indication of expectations for an easier Fed. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.40% from 3.42% late Wednesday. The two-year yield, which moves more on expectations for the Fed, held at 4.10%.

Compiled from Bloomberg and Associated Press reports.