30-Year Fixed Mortgage Rates Decrease Amid High Housing Prices and Scarce Supply

The average rate for a 30-year fixed mortgage has decreased for the first time in four weeks, providing some relief to homebuyers who are already struggling with rising housing prices and a lack of available properties. According to data released by mortgage buyer Freddie Mac on Thursday, the rate fell to 7.09% from 7.22% the previous week. A year ago, the rate averaged 6.35%. The decrease follows a five-week stretch during which rates increased, pushing them to their highest point since November 30, 2021. As mortgage rates increase, they add hundreds of dollars to monthly costs for borrowers, making it harder for them to afford homes. The rate for a 15-year fixed-rate mortgage also decreased, falling to 6.38% from 6.47% the week before. The current rate is higher than it was a year ago when it averaged 5.75%. Mortgage rates are influenced by a number of factors, such as changes in the federal reserve’s interest rate policy and fluctuations in the 10-year Treasury yield, which lenders use as a guide for setting home loan prices. Inflation, which has remained stubbornly high throughout this year, has caused the federal reserve to maintain that it will not cut interest rates until it has reason to believe that price increases are declining at a sustainable pace. Economists predict that mortgage rates are unlikely to see significant decreases until then. Prior to last month, the average rate for a 30-year fixed mortgage had remained below 7% this year, except for a brief period in October when it reached 7.79%. The recent surge in rates has presented difficulties for homebuyers during what is typically the busiest season for property sales. Last month, sales of previously owned U.S. Homes decreased due to the combination of elevated mortgage rates and increasing home prices. Freddie Mac’s Chief Economist, Sam Khater, stated that “an environment where rates continue to hover above 7% impacts both sellers and buyers.” Many potential sellers are hesitant to put their homes up for sale because they want to keep the lower mortgage rates they obtained in previous years. This has led to a shortage of available properties, causing house prices to remain high and presenting additional affordability issues for potential buyers in this high-rate environment.