Mortgage rates tumble to 6.61%
The 30-year fixed-rate mortgage is down from last week when it averaged 7.08%
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Mortgage rates tumbled this week as recent data suggests inflation may have peaked.
The 30-year fixed-rate mortgage averaged 6.61%, down from last week when it averaged 7.08%. A year ago at this time, the 30-year FRM averaged 3.10%.
The 15-year fixed-rate mortgage averaged 5.98% also down from last week when it averaged 6.38%. A year ago at this time, the 15-year FRM averaged 2.39%.
Freddie Mac has stopped reporting the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) which averaged 6.06% last week. A year ago at this time, the 5-year ARM averaged 2.53%.
For sale sign stands in front of a house on Oct. 6, 2020, in Westwood, Mass. (AP Photo/Steven Senne, File / AP Newsroom)
While the decline in mortgage rates is welcome news, according to Freddie Mac, there is still a long road ahead for the housing market. Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact.
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"Currently in the housing market, we’re seeing rising mortgage rates, insufficient supply and elevated house prices bringing about significant affordability challenges," said Pam Perry, Single-Family Vice President of Equitable Housing at Freddie Mac. "Gen Z has taken notice and their hopes of homeownership have waned as the potential issues they may face in purchasing a home have become front and center."
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The Labor Department reported last week that consumer inflation reached 7.7% in October from a year earlier, the smallest year-over-year rise since January. Excluding volatile food and energy prices, "core" inflation rose 6.3% in the past 12 months. On Wednesday, Labor reported that prices at the wholesale level fell for the fourth straight month.
Those figures were all lower than economists had expected, but it remains to be seen whether it’s enough to get the Fed to ease off the jumbo rate hikes.
There had been some hope that the Fed would begin to dial the rate increases down as more evidence comes in that prices may have peaked. However, recent comments by Fed officials have turned knocked down that optimism.
James Bullard, who leads the Federal Reserve Bank of St. Louis, said Thursday that the Fed may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control.
The Fed’s next two-day rate policy meeting wraps up on Dec. 14.
The Associated Press contributed to this report.