30-Year Fixed Mortgage Rates Decrease Amid Homebuyer Struggles with Housing Costs

In response to mounting pressure from homebuyers struggling with rising housing costs and a dwindling number of available properties, mortgage rates recently fell for the first time in four weeks, according to Freddie Mac’s latest figures. The average rate for a 30-year fixed mortgage now stands at 7.09%, down from 7.22% the previous week. This comes after a five-week run of increases that brought rates to their highest levels since late November 2021. When mortgage rates increase, borrowers are faced with additional monthly expenses that can make purchasing a home less affordable. The rate for a 15-year fixed mortgage, commonly chosen by homeowners looking to refinance, also decreased this week, falling to 6.38% from 6.47% the week before. One year ago, this rate stood at 5.75%. The decrease in mortgage rates can be attributed to a fall in the 10-year Treasury yield following recent indications of a slowdown in economic and employment growth. However, experts predict that rates are unlikely to see significant drops until the Federal Reserve has greater assurance that price increases are declining steadily towards its 2% target. After hitting a 23-year peak of 7.79% in October, the average rate for a 30-year mortgage remained below 7% for most of this year until recently. Despite the minor reduction in rates, they are currently more than double their level of February 2020, just prior to the COVID-19 pandemic. The recent surge in mortgage rates has added to the difficulties faced by prospective homebuyers during what is typically the busiest season for home sales, with sales of previously owned US homes dropping last month due to higher mortgage rates and increasing property values. As many potential sellers continue to delay listing their homes due to lower mortgage rates from previous years, inventory continues to diminish, contributing to increased property values and exacerbating existing affordability issues for potential buyers in this high-rate environment, according to Freddie Mac’s Chief Economist, Sam Khater.