Mortgage interest rates sank to 6.60% last week, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.60%, down from 7.08% the week prior.
This is the largest weekly drop in 40 years.
The 15-year fixed-rate mortgage also fell from 6.38% to 5.98%. A year ago, it averaged 2.39%.
As a result, the typical monthly mortgage payment declined by $100, giving a typical homebuyer with a $2,500 budget $12,000 more purchasing power over the course of just one week.
“Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked,” said Sam Khater, Freddie Mac’s Chief Economist.
“While the decline in mortgage rates is welcome news, 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.”
Both headline inflation and core prices saw unexpectedly large declines last week, suggesting that inflation may be headed for a downward turn.
Federal Reserve Governor Christopher Waller warned against premature assessments that inflation has peaked.
“I will not be head-faked by one report,” he said. “We’ve seen this movie before.”
Waller said he was open to a reduced half-point rate increase in December, but reiterated that a full pause is unlikely.
Federal Reserve Chairman Jerome Powell recently said he considers it “very premature” to consider pausing rate hikes.
This week’s report noted that Freddie Mac has enhanced its Primary Mortgage Market Survey methodology for better accuracy and reliability. Information on the changes can be found here.
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