The mortgage market is witnessing a significant shift as rates continue their descent for the third straight week, according to data released by Freddie Mac. The average rate on the benchmark 30-year fixed mortgage dropped to 7.44%, down from 7.5% the previous week. While this marks a notable decline, it remains higher than the 6.61% average recorded during the same week last year.
With the average rate on the 15-year note also decreasing to 6.76%, down from 6.81% the previous week, the market is experiencing a notable shift compared to a year ago when the rate stood at 6.38%.
Sam Khater, Chief Economist at Freddie Mac, attributes the continued decline in mortgage rates to receding inflationary pressures. For the third straight week, mortgage rates trended down, as new data indicates that inflationary pressures are receding,” stated Khater. “The combination of continued economic strength, lower inflation, and lower mortgage rates should likely bring more potential homebuyers into the market.”
The Mortgage Bankers Association reported a 2.8% increase in mortgage applications last week, marking the second consecutive week of gains and the highest level in five weeks. Despite this positive trend, application volume remains 12% lower than the same period last year. Demand for refinancing also saw a modest increase, rising 2% from the previous week, and experiencing a 7% surge compared to the same time last year.
Lawrence Yun, Chief Economist at the National Association of Realtors, weighed in on the situation, stating, “Mortgage rates are plunging with the news of inflation calming.” Yun expressed confidence that interest rate hikes are likely over, and the Federal Reserve may consider cutting interest rates seriously. He added, “Mortgage rates look to head towards 7% in a few months and into the 6% range by the spring of 2024.”
The mortgage market is undergoing a transformative period with rates experiencing a notable decline. As economists predict a continuing downward trend, potential homebuyers may find this to be an opportune moment to enter the market. The interplay of economic strength, inflation dynamics, and mortgage rates will undoubtedly shape the real estate landscape in the coming months.