Borrowers struggling with rampant unaffordability are seeing some relief as mortgage rates cool, ending an upward swing.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.76%, down from 7.79%. A year ago at this time, the 30-year FRM averaged 6.95%.
The 15-year fixed rate remained unchanged at 7.03%. A year ago, it averaged 6.29%.
“The 30-year fixed-rate mortgage paused its multi-week climb but continues to hover under 8%,” said Sam Khater, Freddie Mac’s Chief Economist.
“The Federal Reserve again decided not to raise interest rates but have not ruled out a hike before year-end. Coupled with geopolitical uncertainty, this ambiguity around monetary policy will likely have an impact on the overall economic landscape and may continue to stall improvements in the housing market.”
The Central Bank opted not to raise rates at its November meeting, but recent economic strength led Chairman Jerome Powell to suggest rates may need to stay higher for longer to bring inflation to 2%, the Fed’s goal.
During a press conference held on Wednesday afternoon, Powell said the FOMC is not thinking about rate cuts, which have been predicted for 2024.
“We’re going into these meetings one by one,” Powell said, suggesting future projections are not part of the decision-making process.
Analysts say a December rate hike is on the table should economic data this month stay strong. But the latest jobs report found that far fewer jobs were added in October than expected.
Chief Economist Lawrence Yun with the National Association of Realtors issued a statement after the report was released.
“The Federal Reserve will be pivoting from raising interest rates to current neutral to eventually cutting interest rates next year. The job market has slowed measurably. The latest monthly job gains of 150,000 in October are one of the weakest in the past three years. The unemployment rate rose to 3.9%, close to a two-year high,” Yun said.
Wage gains also slowed to 4.1%, compared to nearly 6% last year, which will lower inflationary pressures, Yun said.
Yun expects there will be more activity in the housing market moving forward.
“The bond market is reacting as if the Fed will be cutting rates in 2024. The key benchmark 10-year Treasury yield slid down to 4.55% and is below a recent high of 5%. That means mortgage rates will be coming down. The 30-year fixed rate will stick in the 7% range for this year but looks to move down into the 6% range by the spring of next year,” Yun said.
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