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Mortgage rates fell slightly this week after rising for a month in a row, sparking an increase in purchase applications in a housing market that has been largely stagnant for months due to soaring home prices and persistently high interest rates.
Freddie Mac’s latest primary mortgage market study, released Thursday, found that the average benchmark interest rate 30 year fixed mortgage This week it fell to 6.88%, down from 6.94% last week. A year ago, the average interest rate on a 30-year loan was 6.73%.
Homes for sale in Cupertino, CA on February 7, 2024. (Lauren Elliott/Bloomberg via Getty Images/Getty Images)
The average interest rate on 15-year fixed mortgages also fell slightly to 6.22% from 6.26% last week. A year ago, the average interest rate on a 15-year fixed bond was 5.95%.
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“This week provided evidence that purchase demand remains sensitive to changes in interest rates, as applications rose for the first time in six weeks as interest rates declined,” said Sam Cater, chief economist at Freddie Mac.
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“Mortgage rates continue to be one of the biggest hurdles for potential homebuyers looking to enter the market,” Carter added.
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The Mortgage Bankers Association reported Wednesday that lower interest rates led to a nearly 10% increase in mortgage applications and a 16% increase in FHA purchase applications.
Record home prices and rising interest rates are accelerating the affordability crisis in the U.S. housing market. (Liu Guanguan/China News Service/VCG via Getty Images / Getty Images)
Still, with interest rates still stuck in the low 6% range, many potential buyers and sellers (the majority of whom are locked in rates below 5%) are waiting until their mortgage rates are too low before taking action. We are watching from the sidelines as it continues to decline.
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At the same time, the affordability crisis in the housing market continues, with home prices at all-time highs amid a shortage of housing on the market.
