30-Year mortgage rate drops to lowest level in weeks

The average rate on a 30-year mortgage in the United States dropped this week to the lowest level since late October.
Mortgage buyer Freddie Mac said Thursday that the rate dipped to 6.69 percent from 6.81 percent last week. This is also an improvement from a year prior when the average rate was 7.03 percent.
The average rate on a 30-year mortgage is the lowest it has been since October 24 when it was at 6.54 percent.
Meanwhile, borrowing costs on a 15-year fixed-rate home loan dropped to 5.96 percent from 6.1 percent last week. A year ago, the average rate was 6.29 percent.
How Have Mortgage Rates Changed?
Mortgage rates started to rise from the lows experienced during the COVID-19 pandemic in 2022. Rates started to ease in July, for the most part, hitting their lowest average in two years in late September, 6.08 percent.
After reaching this low in September, rates started to creep back up, peaking at 6.79 percent in early November before falling back down. On November 14, Freddie Mac said the average rate on a 30-year mortgage dropped to 6.78 percent from 6.79 percent the week prior.
How Are Treasury Bonds Doing?
One of the several factors that influence mortgage rates is the yield on U.S. 10-year Treasury bonds, which lenders use as a guide to price home loans. The higher the yields on long-term U.S. Treasuries, the more confidence investors have in the future of the economy. On the other hand, high long-term yields can also signal an expectation of rising inflation.
The yield on U.S. 10-year Treasury bonds was 4.18 percent Thursday afternoon, down from the 4.26 percent yield last Thursday.
Fed Expected to Cut Rates Again
Mortgage rates are also influenced by the federal funds rate, which is the Federal Reserve’s benchmark interest rate.
When the Fed lowered its benchmark rate, which was at a 23-year high, for the first time in over four years in September, mortgage rates hit a two-year low.
The Fed cut rates again in November, bringing it to between 4.5 to 4.75 percent.
The federal funds rate is the target interest rate at which commercial banks borrow and lend their extra reserves to one another overnight. If the federal funds rate continues to decrease, the cost of consumer borrowing—including mortgages, auto loans and credit cards—should go down over time.
Many expect the Fed to cut its rates again when it meets in two weeks, giving hope to potential homebuyers.
This article includes reporting from The Associated Press.
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