WASHINGTON–Mortgage rates, which have been steadily rising and which have combined with high home values to price many would-be buyers out of the market, took a sharp drop last week after a number of economic reports that indicated inflation may finally be easing.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.61% in the week ending Nov. 17, down from 7.08% the week before, marking the largest weekly drop since 1981. A year ago, the 30-year fixed rate stood at 3.10%, Freddie Mac said.
“While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact.”
Many Will Still Pay More
The Freddie Mac survey only includes borrowers who put 20% down and have excellent credit. “But many buyers who put down less money upfront or have less than perfect credit will pay more than the average rate,” noted MSNBC in its coverage.
Investors saw last week’s lower-than-expected CPI data as an indication that the Federal Reserve may make smaller interest rate hikes in the months ahead, George Ratiu, Realtor.com’s manager of economic research, told MSNBC.
A buyer purchasing the median-priced home with a 20% down payment at last week’s average rate of 7.08%, was facing a monthly payment of about $2,280, according to Realtor.com data cited by MSNBC. At a rate of 6.61%, the same buyer would see their payment fall to $2,174. While the $100 in savings a month may not seem like much, over the course of a 30-year loan, the buyer would save close to $48,000 in interest, the report added.
Uptick in Applications
MSNBC added those savings spurred some home buyers to sweep in and lock in a lower mortgage rate, as mortgage applications increased for the first time in seven weeks, according to the Mortgage Bankers Association, with both purchase and refinance applications up.
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