Fastest Drop in Mortgage Rates in 41 Years
Mortgage rates just had their most substantial weekly plunge in nearly 41 years, dropping to 6.61% for a 30-year fixed mortgage --the lowest in almost two months. Last week's average was 7.08%.
"Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked," states Freddie Mac's chief economist, Sam Khater.
This result reflects a shift in Freddie Mac's methodology that provides a more comprehensive and accurate view of the mortgage market, according to the company. Instead of surveying lenders to calculate average rates, Freddie Mac now uses data collected by its automated underwriting system.
"While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market," Khater commented. "Inflation remains elevated, the Federal Reserve is likely to keep interest rates high, and consumers will continue to feel the impact."
The government reported that inflation eased up in October. However, Fed Chair Jerome Powell remarked that it's premature to consider inflation paused.
This latest decline in rates also offers a reprieve to builders hesitant to reduce prices and homebuyers demanding lower costs. However, there remains a significant degree of uncertainty.
"Some buyers may want to wait and see if rates will drop even lower," comments George Ratiu, manager of economic research at Realtor.com. "However... the mortgage market is not out of the woods. We may still see rates rebound back above 7% before the end of the year."