According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage has fallen to 6.76%. This is a drop from 6.81% last week. This small decrease comes after several weeks of sustained rates over 6.62%. Last fall and in January, when the average mortgage rate spiked well over 7%, buyers fell silent. This was a critical turning point in the housing finance industry.
The 6.76% figure is significantly lower from the 7.22% average posted one year prior. That being said, it’s still above the 6.47% rate reported for a 30-year fixed mortgage over the same period. Mortgage rates rise and fall based on a number of complexities. Among the major influences are the Federal Reserve’s interest rate policy decisions and the global demand for U.S. Treasurys.
More recently, investor activity sharpened and outlook on inflation in the near-term grew. In response, the yield on the 10-year Treasury jumped to 4.5%. Based on midday Thursday trading, the yield is now 4.23%, compared with 4.17% late Wednesday. This dramatic change in Treasuries yields has an immediate impact on mortgage rates, as they are very closely tied to the movement of bond market’s volatility.
Indeed, the average rate on a 15-year fixed-rate mortgage fell. This has been taking place at the same time as dramatic increases in 30-year mortgage rates. This reduction could give consumers more flexibility to explore different options as they plan their home financing journey.
Freddie Mac’s latest data further echoes the connection between mortgage rates and a larger economic picture. When bond market investors start reassessing their outlook for inflation, the ripples from those shifts can cause mortgage pricing to fluctuate. The Federal Reserve’s monetary policy has a powerful impact on economic fundamentals. Rate increases make borrowing less attractive, while an interest rate decrease has the opposite effect.
