The 30-year fixed mortgage rate retreated for the fifth consecutive week even as the Federal Reserve recently raised its key borrowing rate for the seventh time this year.
Freddie Mac reported Thursday that the average rate on the benchmark 30-year fixed mortgage has dropped to 6.31 percent after falling every week for the past few weeks. The average was 7.08 percent in November. All fixed-rate mortgage products, including 30-year jumbo loans, FHA loans, and VA loans, saw lower borrowing costs. Mortgage rates that are adjustable remained largely unchanged in the meantime.
In an effort to lower the highest inflation in decades, the Federal Reserve raised its rate once more by 0.50 percentage points on Wednesday, the seventh time this year. The increase pushed the key interest rate to a range of 4.25 – 4.5 percent, the highest level in 15 years.
Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy. The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand. The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.
Freddie Mac Report
Although today’s mortgage rates may seem bad compared to the 3 percent rates of 2021, minor fluctuations in the mortgage rates can have a significant impact on a loan’s monthly payments and overall borrowing costs.
Consider the following illustration: The principal and interest payment on a $300,000 mortgage would be $2,062 per month at a mortgage rate of 7.33 percent as opposed to $1,925 at a rate of 6.65 percent. Additionally, by locking in a lower rate today, you’d save close to $50,000 in interest fees over the course of repayment.