February 23, 2024
Loans

Rates on the most popular US home loan drop to the lowest in 6 months


A FOR SALE sign is displayed outside a property on Madison Ave. in Toronto.

Interest-only mortgages were much more strictly regulated after the financial crisis, but now higher-income borrowers are turning to them as home prices stay high.Lance McMillan/Getty Images

  • Freddie Mac said Thursday that rates on a typical 30-year fixed mortgage dropped to 6.67%.

  • That’s the lowest level since June and comes amid optimism for Fed rate cuts in 2024.

  • Mortgage rates had moved as high as 7.79% in October.

Mortgage rates for the most popular US home loan fell to the lowest level since June, according to data released Thursday from Freddie Mac.

The average 30-year fixed rate dipped to 6.67% from 6.95% the week prior. Back-to-back weeks with rates below 7% come as a welcome sign for house hunters, following 17 consecutive weeks above that threshold.

Rates had touched a high of 7.79% in October, and the recent declines have come as markets expect the Fed to ease monetary policy as soon as March 2024.

“Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects,” Freddie Mac said in a statement. “A rise in homebuilder confidence, followed by new home construction reaching its highest level since May, signals a response to meet heightened demand as current inventory remains low.”

Lower mortgage rates should provide some relief for prospective homebuyers, who have seen historically low affordability conditions.

In fact, separate data showed that only 15.5% of homes in 2023 were affordable for the typical American household, the lowest in Redfin data going back to 2013.

The real estate group said it determined affordability based on estimated monthly mortgage payments being no more than 30% of a household’s median income.

High mortgage rates also left homebuyers with limited options over the last year, since current homeowners were reluctant to move and give up the lower rates they secured in the past.

Read the original article on Business Insider



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