The mortgage rates have fallen to 6.61%

This week, mortgage rates fell as inflation data suggested that they may have peaked.

Average 30-year fixed-rate mortgage rates were 6.61% last week, compared to 7.08% last week. The 30-year FRM averaged 3.00% a year ago.

Average 15-year fixed rate mortgage rates were 5.98%, which is down from 6.38% last week. The average 15-year FRM was 2.39% a year ago.

Freddie Mac stopped reporting the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM), which averaged 6.06% last Wednesday. The 5-year ARM was 2.53% a year ago.

Although the drop in mortgage rates is a welcome development, Freddie Mac says there are still many challenges ahead of the housing market. The Federal Reserve will likely keep interest rates high, which will cause inflation to remain elevated. Consumers will still feel the effects.

“Currently, the housing market is seeing rising mortgage rates and insufficient supply, which are causing significant affordability challenges,” stated Pam Perry, Single-Family Vice president of Equitable Housing at Freddie Mac. “Gen Z is taking notice, and their hopes of homeownership are waning as they have to face the potential problems in buying a home.

Last week, the Labor Department reported that consumer inflation rose 7.7% to October from the previous year. This is the lowest year-over-year increase since January. Core inflation increased 6.3% over the past twelve months, excluding volatile food and energy prices. Labor reported Wednesday that wholesale prices fell for the fourth consecutive month.

These numbers were lower than economists expected. However, it is still to be seen if it is enough to convince the Fed to reduce the rate hikes.

As more evidence suggests that prices have peaked, there was some hope that the Fed might begin to reduce the rate increases. Recent comments from Fed officials have scuttled any hope of that.

James Bullard, the Federal Reserve Bank of St. Louis’s chief economist, stated Thursday that the Fed might have to increase its benchmark interest rate to keep inflation under control.

On Dec. 14, the Fed will conclude its next two-day rate policy meeting.

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