Real Estate News
LOS ANGELES (AP) — The average rate of interest on 30-year mortgages fell this week to just under 7% for the primary time since mid-April, a slight relief for homebuyers in a housing market depressed by rising prices and comparatively few available properties.
The rate of interest fell from 7.02% last week to six.94%, mortgage buyers Freddie Mac said on Thursday. One 12 months ago, the common rate of interest was 6.57%. Five years ago, in line with the Federal Reserve Bank of St. Louis.
This is the third consecutive weekly decline in the common rate of interest. The latest declines follow a five-week streak of increases that pushed the common rate of interest to its highest level since Nov. 30. Higher mortgage rates can add a whole bunch of dollars a month to borrowers' costs, limiting homebuyers' purchasing options.
Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their mortgages, also fell this week. The average rate of interest fell to six.24 percent from 6.28 percent the previous week. A 12 months ago, the common was 5.97 percent, in line with Freddie Mac.
Mortgage rates are influenced by several aspects, including the bond market’s response to the The US Federal ReserveUS rate of interest policy and the event of the 10-year US Treasury yield, which serves as a guide for lenders when pricing home loans, are of crucial importance.
Yields on U.S. Treasury bonds have fallen broadly since Federal Reserve Chairman Jerome Powell said earlier this month that the central bank was more prone to cut rates of interest than raise them.
However, the Fed insisted that it doesn’t plan to chop rates of interest until it’s more confident that price increases will slow sustainably and reach the 2 percent goal.
According to economists, mortgage rates of interest are unlikely to fall significantly until then.
After rising to a 23-year high of seven.79% in October, the common rate of interest on a 30-year mortgage remained below 7% this 12 months until last month. Even with the recent declines, the speed continues to be well above where it was two years ago, at 5.25%.
Last month's rise in rates of interest was an unwelcome development for prospective home buyers, coming in the midst of what traditionally is a period when most home sales occur. On average, greater than a 3rd of all homes sold in a 12 months are purchased between March and June.
In the U.S., used home sales declined in March and April as homebuyers struggled with rising mortgage rates and costs.
The decline in mortgage rates this month has led to a revival in mortgage applications, which rose 1.9% last week in comparison with the previous week, in line with the Association of Mortgage Banks.
“May was a better month for the mortgage market. The last three weeks have seen falling mortgage rates and rising applications,” said MBA CEO Bob Broeksmit. “Interest rates below 7% are good news for prospective buyers, and MBA expects them to continue to fall this summer.”
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