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Mortgage rates have followed Treasury yields lower.
Brandon Bell/Getty Images
Mortgage rates fell to 7.5% this week in the greatest decline since last year. Investors shouldn’t expect it to make much of a difference for cost-burdened buyers.
Mortgage rates this week followed 10-year Treasury yields lower, according to
Freddie Mac
data released Thursday. The average 30-year fixed mortgage rate was 7.5%, about a quarter of a percentage point lower than last week’s average rate of 7.76%.
The decline follows a host of factors, from Treasury auctions to cooler-than-expected economic data, that caused the Treasury yield to fall late last week, Barron’s reported. Mortgage rates typically move with the 10-year yield, though the gap between the two has been wider than normal this year.
The drop in rates was the most extreme since November 2022—but might not make a big difference for demand. The new weekly rate is the lowest since early October—a drop that erases some, but not all, of mortgage rates’ climb through the second half of this year.
The decline comes at a typically slow time of year for the housing market—but it also may not alleviate the one-two punch of rising home prices and mortgage rates that remain significantly higher than one year ago. The buyer of a $400,000 home at this week’s average rate would pay roughly $60 less a month than a buyer at the prior week’s rate.
That’s a little more money in the bank, but probably not enough to make a significant dent in high home costs. Home affordability slumped to its lowest level on record in the third quarter for first-time buyers and buyers more broadly, according to National Association of Realtors indexes released Thursday morning. Single-family home prices rose in more than four in five metropolitan areas in the third quarter, the trade group said.
“Incoming data show that household debt continues to rise, primarily due to mortgage, credit card and student loan balances,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”
The Mortgage Bankers Association, which reported on Wednesday that its mortgage rate gauge had declined significantly, said its index tracking home purchase loan applications increased by 3%. The gain comes a week after application volume slumped to a 28-year low.
Write to Shaina Mishkin at [email protected]
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