Categories: Business

Mortgage Rates Hit 6-Week Low in the US

Decline in Long-Term Mortgage Rates

Prospective homeowners in the US can breathe a sigh of relief, as the average long-term mortgage rate has hit its lowest level in six weeks. The benchmark 30-year rate fell for the third straight week, to 6.32 percent. This is good news for those looking to purchase a home since rising borrowing costs can add hundreds of dollars per month.

Reasons for the Decline

The decline in long-term mortgage rates comes after the Federal Reserve raised interest rates nine times in the last year. This pushed many potential homebuyers to the sidelines. However, the Fed’s rate hikes can impact borrowing rates across the board for businesses and families, but rates on 30-year mortgages usually track the moves in the 10-year Treasury yield.

Investor expectations for future inflation, global demand for US Treasuries, and the Federal Reserve’s interest rates can influence the cost of borrowing for a home. Treasury yields have fluctuated wildly since the collapse of two midsize US banks two weeks ago.

Low Inventory Remains a Key Challenge

Despite declining mortgage rates, low inventory remains a key challenge for prospective buyers. Existing home sales fell 17.8% from 2021, making it the weakest year for home sales since 2014 and the biggest annual decline since 2008 when the housing crisis began.

However, recent data shows that home prices are leveling off with national median home prices slipping 0.2% from February last year to $363,000.

Economic Uncertainty and Market Competition

Economic uncertainty is one factor causing mortgage rates to drop for three consecutive weeks. Potential homebuyers are expected to take advantage of any further dips in mortgage rates.

Competition has also increased in the housing market as buyers rush to capture the dip in rates. Mortgage applications to purchase a home jumped by 2% for the week ending March 24, while refinance activity also perked up by 5%.

However, active inventory remains constrained, leaving some buyers priced out again.

What’s Next for Mortgage Rates?

Gains in the market could reverse if new economic data on Friday shows high inflation. Any additional banking troubles could send the 10-year Treasury yield – and mortgage rates – lower.

According to Daryl Fairweather, chief economist at Redfin, mortgage rates are unlikely to increase again unless the next inflation report is worse than expected.

Despite affordability and inventory challenges, declining mortgage rates may give hope to those seeking to own a home in the US.

Image Source: Wikimedia Commons

Randy Lawson

Randy Lawson is a dedicated journalist with a passion for writing about diverse topics. With years of experience in the field, Randy has honed his skills in delivering news articles that inform, engage and inspire readers. As a versatile writer, Randy covers everything from breaking news to feature articles, providing insightful analysis and first-hand accounts to his audience. He firmly believes in the power of journalism to make a positive impact on society, and strives to deliver accurate and trustworthy information in every article he writes.

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