Last Updated on November 17, 2023 by SPN Editor
For the third week in a row, mortgage rates decline, kindling hope for the housing market. The widely followed 30-year fixed mortgage dropped to 6.13%, marking its lowest point since mid-September and igniting a modest resurgence in the housing sector. The Home loan application surge as mortgage rates decline for the third straight week, signaling a glimmer of hope for a sector grappling with escalating rates.
According to data from Freddie Mac, the average rate for the 30-year fixed-rate mortgage stood at 7.44% in the week ending November 16, down from the previous week’s 7.5%.
Mortgage Bankers Association also reported this mortgage rates decline spurred a notable surge in home loan applications last week, with the 30-year fixed mortgage rate hitting a four-month low of 6.2%, as reported by the These trends indicate a potential shift toward better conditions in a housing market that has faced significant challenges.
This drop has fueled a surge in mortgage applications, with a 2.8% uptick in applications for home purchases or refinancing last week, reaching the highest level in five weeks.
The combination of sustained economic strength, reduced inflation and mortgage rates decline is poised to draw more potential homebuyers into the market.
The lowered mortgage rates have ushered in heightened demand for three consecutive weeks. If this trend continues and home prices stabilize, it is anticipated that more potential home buyers will reenter the market, signaling a promising trajectory for the housing industry.
While recent weeks have seen a cooling in mortgage rates, they still remain historically high, influenced by the Federal Reserve’s actions.
The Fed’s restrained monetary policy seems to be impacting the economy, with consumer prices experiencing the slowest increase in two years and retail sales facing their first decline in seven months.
These indications suggest a reduced likelihood of a rate hike in December, potentially leading to further mortgage rates decline.
Prospective buyers have swiftly responded to the easing rates, driving both purchase and refinance applications to their highest levels in over a month.
Though 2023 has posed challenges for potential homebuyers, prospects for relief in the coming year appear promising, with gradual declines in mortgage rates anticipated and a slight increase in available inventory.
While it’s unlikely for mortgage rates to return to pre-Great Recession levels below 5%, there’s potential for further decrease, possibly settling around 6% to 7% by the spring buying season.
However, limited inventory remains a significant hurdle for homebuyers.
For those with flexibility, spring might bring forth more listings and reduced mortgage rates, offering a more opportune time to step into the housing market.