Buyers lucked out last week as rates continued to decline, pulling down the cost of purchasing a home.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.74%, down from the week prior’s 6.88%. A year ago at this time, the 30-year FRM averaged 6.60%.
This is the second decline after a month-long stretch of increases, which broke last week. Mortgage applications saw a bump in response.
The 15-year fixed also fell, dropping to 6.16% from 6.22%. A year ago, it averaged 5.90%.
“The 30-year fixed-rate mortgage decreased again this week, with declines totaling almost a quarter of a percent in two weeks’ time,” said Sam Khater, Freddie Mac’s Chief Economist.
“Despite the recent dip, mortgage rates remain high as the market contends with the pressure of sticky inflation. In this environment, there is a good possibility that rates will stay higher for a longer period of time.”
Stocks slumped across the board this week after February producer prices were released, showing surprisingly hot inflation. Wholesale inflation jumped 0.6% month-over-month in February, double the Dow Jones estimate.
That added to an earlier Consumer Price Index reading that pegged YOY inflation at 3.2%, slightly higher than expected and well out of the Fed’s preferred 2% range.
Wall Street is betting there will be no rate cut at the March Federal Open Markets Committee (FOMC) meeting, instead favoring a June or July decrease instead.
Mortgage rates don’t follow interest rates exactly, but cuts do have an impact on the market overall. Rates should trend lower with rates, helping to reenergize buyers who are still relegated to the sidelines by the high cost of buying a home.
Americans say housing costs will be a major player in their decision-making come November’s election. The Biden administration recently responded to market forces with a tax credit plan aimed at reducing the financial burden of high rates.