Mortgage benchmarks continued to decline last week after Federal Reserve Chairman Jerome Powell told lawmakers that the central bank would not change its strategy anytime soon.
30-year fixed rate mortgages averaged 2.88% for the week ending July 15, down two basis points from the previous week, Freddie Mac
reported on Thursday… The 30-year mortgage rate, which peaked at 3.18% in April, fell 30 basis points, or nearly a third from 1%.
The 15-year fixed rate mortgage increased by two basis points, to an average of 2.22%, while the 5-year Treasury-indexed hybrid adjustable rate mortgage fell by five basis points, to an average of 2. 47%.
“The summer mortgage rate fall continues as the 30-year fixed rate mortgage falls for the third week in a row,” Freddie Mac chief economist Sam Hather said in a report. “While this decline is small, it brings moderate relief to borrowers who buy in a market with high home valuations and scarce inventories.”
Movements in mortgage rates over the past week have confirmed that the Fed is playing a large part as a driver when it comes to the trajectory of interest rates these days. Speaking before the Senate, Powell reiterated his position that the current surge in inflation will be temporary, indicating that the Fed intends to maintain its current approach to monetary easing.
But keeping short-term interest rates low isn’t the only way the Fed is softening mortgage market friction. “Just as important to loan rates, the Fed is expected to maintain $ 40 billion in monthly mortgage-backed securities purchases, making it affordable for homeowners and buyers alike,” said George Ratiu, senior economist at Realtor. … com.
“In short, the Fed believes there is still work to be done to get the economy back on track to keep mortgage rates low for the rest of the year,” Ratiu added.
(Realtor.com is operated by News Corp
a subsidiary of Move Inc. and MarketWatch is a division of Dow Jones, which is also a subsidiary of News Corp.)
Low prices, however, are not the only cause for joy among home buyers. According to Realtor.com, the number of new offerings on the market increased by 5% last week after falling during the Fourth of July holiday season. Now the total volume of homes for sale is just 35% lower than a year ago, and this is the 14th straight week in which the annual decline has decreased.
Some buyers likely left the market as they continued to face intense competition for homes and rising prices. Those left behind may face a less stressful home buying experience in the coming months as stock improves, reducing competition for affordable properties.