The average mortgage rate on the thirty-year fixed-rate mortgage fell to 5.99%. Since September, the housing market had not seen mortgage rates in the 5% range.
A comparison with last year’s rates
The rate began this week at 6.21 percent and fell on Wednesday after Jerome Powell (Federal Reserve Chairman) said inflation has eased but remains elevated. And this was a shift from the previous language. That sent bond yields further lower, and mortgage rates followed the yield on the 10-year Treasury.
The chief operating officer of Mortgage News Daily, Matthew Graham comment
The chief operating officer of Mortgage News Daily, Matthew Graham said that measured steps might continue till the economic and inflation data is present to support them. This means that the rates can progress into the five ′s and are unlikely to get back into the four ′s. He further said that he is not saying that will not happen, but he is just saying that it will take more time than the rate that they remember from the past.
Mortgage rates peaked in October. It was with the thirty-year fixed at 7.37 percent and has been sliding since then. For homebuyers, that indicates savings. For a consumer who is purchasing a dollar 400,000 home today with a 20 percent down payment, the monthly payment is dollars 293 less than it was in October.
On the other hand, the lower rates are decreasing buyer interest. The pending home sales measuring signed contracts on existing homes rose in December for the 1st time in 6 months. They gained 2 percent compared with November month. This report is according to the National Association of Realtors.
Just before recovery from the pandemic recession kicked into gear. The combination of the pandemic situation and low mortgage rates unleashed a tidal wave of demand for housing. This was already in short supply long before the pandemic. The Fed’s rate hikes throughout the last year pushed mortgage rates from lows near 2.8% in February 2021. The higher rates have sapped that momentum from the housing market. It led to many monthly declines in home sales. And rates are 2.33 percentage points higher than in February 2022.