The average long-term U.S. mortgage rate fell again this week, positive news for potential homebuyers after rates reached their highest level since November earlier this month
ByALEX VEIGA AP Business Writer
A home under construction at a development in Eagleville, Pa., is shown on Friday, April 28, 2023. On Thursday, Freddie Mac reports on this week's average U.S. mortgage rates. (AP Photo/Matt Rourke)
The Associated Press
The average long-term U.S. mortgage rate fell again this week, positive news for potential homebuyers after rates reached their highest level since November earlier this month.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan slipped to 6.69% from 6.71% last week. A year ago, the rate averaged 5.78%. Despite easing the past two weeks, the average rate is only down slightly from its 2023 high of 6.79% set in early June.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, rose this week to 6.10% from 6.07% last week. A year ago, it averaged 4.81%, Freddie Mac said.
The pullback comes a day after the Federal Reserve decided to forgo another increase in its benchmark interest rate. The pause in hikes followed 10 straight increases in 15 months. But the central bank also warned that it could raise interest rates two more times this year in its battle against inflation.
Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates influence rates on home loans.
“Mortgage rates decreased slightly this week in anticipation of the pause in rate hikes by the Federal Reserve,” said Sam Khater, Freddie Mac’s chief economist. “As inflation continues to decelerate, economic growth is slowing and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next.”
High rates can add hundreds of dollars a month in costs for homebuyers, limiting how much they can afford in a market that remains out of reach to many Americans after years of soaring home prices. They also discourage homeowners who bought their home or refinanced in recent years when rates were far lower from selling. That’s one reason the number of homes on the market remains near historic lows.
The U.S. housing market has been slow to regain its footing this year, limited by elevated mortgage rates and the thin inventory of available homes.
Sales of previously occupied U.S. homes fell 23.2% in the 12 months ended in April, marking nine straight months of annual sales declines of 20% or more, according to the National Association of Realtors.
The dearth of homes on the market has helped prop up prices. The national median home price fell to $388,800 in April — down only 1.7% from a year earlier.
