The rise in mortgage rates has hurt the housing market, with sales of existing homes falling for 11 straight months to the lowest level in more than a decade. Mortgage rates coming off this peek are likely to provide some relief from the housing recession.
Mortgage buyer Freddie Mac said that the average rate for a 30 year fell to 6.09% on Thursday from 6.13% last week. The average rate was 3.55% a year ago.
The 15 year fixed-rate mortgage averaged 5.14%, down from last week when it averaged 5.17%. A year ago, the 15 year FRM averaged 2.77%.
MEANINGFUL DAMAGE THAT S NOT NORMAL, Mortgage rates fell again, with the 30 year fixed-rate down nearly a full point from November, when it peaked at just over seven percent, said Sam Khater, Chief Economist for Freddie Mac.
The Federal Reserve raised its benchmark lending rate by 0.25 percentage points at its first meeting of 2023 Wednesday, its eighth increase in less than a year. It pushed the central bank's key rate to a range of 4.5% to 4.75%, its highest level in 15 years.
Fed Chair Jerome Powell appeared to suggest on Wednesday that he expects to see two additional quarter-point rate hikes this year, even though he acknowledged that some measures of inflation have eased.
Rates on 30 year mortgages usually track the moves in the 10 year Treasury yield, which lenders use as a guide to pricing loans, despite the fact that those rate hikes affect borrowing rates across the board for businesses and families. The cost of borrowing for a home is affected by investor expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates.