Mortgage rates dropped nearly a full percentage point from last November, potentially making access to housing more affordable for millions more homebuyers, according to Freddie Mac.
The average rate for a 30-year fixed-rate mortgage fell to 6.09% for the week ending Feb. 2, according to Freddie Mac’s Primary Mortgage Market Survey. This was a decrease from the previous week when it averaged 6.13% but the rate remained significantly higher than last year when it was 3.55%.
The average rate for a 15-year mortgage was 5.14% this week, down from 5.17% the week before and up from 2.77% last year.
The continued decline in mortgage rates has created significant savings that could open the housing market for homebuyers shut out by the expensive borrowing costs, according to Freddie Mac Chief Economist Sam Khater.
“According to Freddie Mac research, this one percentage point reduction in rates can allow as many as 3 million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” Khater said.
If you are looking to take advantage of lower mortgage rates by refinancing your mortgage loan, or are ready to shop for the best rate on a loan, consider visiting an online mortgage broker like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
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High-interest rates leave millennials struggling to buy homes, survey says
Lower mortgage rates and improving economic indicators could help millennials catch a break when it comes to homeownership, according to a recent survey.
This demographic cohort said that high interest rates were the top obstacle to owning a home, according to a Real Estate Witch survey. Fifty-nine percent said they have had to save more for a home because of rising costs and 36% said they planned to spend more on their home purchase.
Inflation has started showing signs of easing. Inflation rose 6.5% year-over-year in December, reflecting the lowest level in over a year, according to the latest Consumer Price Index (CPI) report.
The Federal Reserve has responded by slowing the pace of interest rate increases as it looks to bring inflation to a 2% target. It announced a 25-basis point rate increase on Wednesday, the second consecutive rate hike that was lower than the previous increase.
“If evidence over the coming months suggests that inflation is on a consistent downward trend, mortgage rates may continue to decline and activity in the housing market will pick up—just in time for spring homebuying season,” First American Deputy Chief Economist Odeta Kushi said in a statement. “If high inflation proves more stubborn, especially in the service sector, the Fed may respond by further tightening the screws on monetary policy, putting upward pressure on mortgage rates.”
If you are ready to shop for a mortgage loan or are considering refinancing your loan to take advantage of lower mortgage rates, you can use the Credible marketplace to help you compare interest rates from multiple mortgage lenders and get prequalified in minutes.
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Mortgage applications and sales drop
Pending home sales and mortgage applications, which had been on a rebound in recent weeks, dropped last week, according to the Mortgage Bankers Association (MBA).
Mortgage applications dropped 9% and refinance activity fell 7% on a seasonally adjusted basis from one week earlier, according to the MBA’s weekly mortgage applications survey for the week ending Jan. 27, 2023. Home purchases decreased by 10% from one week earlier.
“Despite another drop in mortgage rates, mortgage applications declined last week for the first time in 2023,” MBA President and CEO Bob Broeksmit said in a statement. “MBA expects mortgage rates to continue a slow descent this year, which, along with slower home-price growth, should lead to increased homebuyer demand as the spring homebuying season gets underway.”
If you are ready to shop for a mortgage loan or are looking to refinance an existing one, you can use the Credible marketplace to compare rates and lenders and get a mortgage preapproval letter in minutes.
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