Mortgage rates have tumbled this week in the biggest one-week drop since last November, according to data released by Freddie Mac. The 30-year fixed-rate mortgage fell to an average of 7.50% in the week ending November 9, down from 7.76% the week before.
The drop in mortgage rates is good news for homebuyers who have been shellshocked by soaring rates, which have sent home loan applications and home sales down sharply. The dip in rates has resulted in a 2.5% increase in all loan applications from a week ago, with applications for mortgages to purchase a home going up by 3%.
However, despite the recent drop in rates, the housing market remains stagnant. According to Freddie Mac’s chief economist, Sam Khater, many consumers are feeling strained by the high cost of living, and unless mortgage rates decrease significantly, the housing market will continue to struggle.
The Federal Reserve’s decision to keep interest rates where they were at its last monetary policy meeting was good news for homebuyers dealing with sky-high mortgage rates. However, the option for an additional rate hike is still on the table.
It’s been reported that while rates are expected to come down in 2024, they are not forecast to return to pandemic levels. According to Lisa Sturtevant, chief economist at Bright Multiple Listing Service, we are in a new era for mortgage rates, where prospective homebuyers can expect rates to settle above 6%.
The effects of the current mortgage rate environment are being felt by homebuyers across the country, with the high cost of financing a typical home purchase contributing to a new record in the year-over-year increase in the cost of buying a home, according to Realtor.com.
Overall, the current mortgage rate situation continues to impact the housing market and the financial outlook of homebuyers, and the uncertainty surrounding future rate hikes and the availability of inventory will likely shape the housing market in the months to come.