Mortgage interest rates fell for a fifth straight week, in what may be a window of opportunity for priced-out homebuyers.
The average rate on a 30-year fixed mortgage fell to 6.31% this week from 6.33% last week, according to mortgage giant Freddie Mac. It is down more than three-quarters of a point from its peak last month, though it is still double the level from a year ago.
Rising mortgage rates have driven up the cost of buying a home, putting purchases further out of reach for prospective buyers. Home prices have risen sharply in the last couple of years as well. Mortgage rates tend to follow the yield on the 10-year Treasury note.
Rates are at the center of dueling economic narratives that have heightened volatility across financial markets. They rose for much of this year because the Federal Reserve has been hiking its own benchmark rate to fight inflation. Now mortgage rates are falling because many believe the central bank will drive the U.S. into a recession and make a policy U-turn.
However, the Fed on Wednesday raised its rate by another half a percentage point, and officials said they expect rates to go higher than previously expected.
So far, there are few signs that the recent fall in rates has ushered in significant housing demand. The Mortgage Bankers Association said this week that its gauge of mortgage applications rose about 3% from a week earlier, but was still down sharply from a year ago.
Bob Broeksmit, president and CEO of MBA, said the trade group "expects the recent downward trend in mortgage rates to continue, which, along with moderating home prices, should encourage more homebuyers to return to the market in early 2023.”
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