Mortgage Rates Fall to 7.18 Percent for Third Straight Week

Mortgage rates fall November continued in the week ending November 5, when Freddie Mac reported that the average 30-year fixed-rate mortgage eased to 7.18 percent, down 0.06 percentage points from 7.24 percent the previous week. It was the third consecutive weekly decline and a fall of 22 basis points from a month earlier, offering modest relief to buyers who have faced rates above 7 percent for much of the autumn. The 15-year fixed-rate mortgage averaged 6.57 percent, down 0.03 points from the prior week. The survey is a weekly average rather than a single-day lender quote, so it smooths daily swings, but the direction was clear: borrowing costs were easing, if only slightly, after a long stretch at elevated levels.

The backdrop helps explain the move. The Federal Reserve held its benchmark rate steady at 3.75 to 4.00 percent at its October 27 to 28 meeting, and the 10-year Treasury yield, which influences mortgage pricing, eased in early November. Lender quotes tracked by other sources told a similar story: Zillow data put the 30-year fixed purchase rate at 7.04 percent on November 5, down 6 basis points from the prior day and 11 points below the prior week, and the rate slipped below 7 percent on November 6 for the first time since September. Redfin data for the four weeks ending November 1 showed the median home-sale price at $388,604, down 0.4 percent from a year earlier, and the median monthly payment at $2,777 at a 7.24 percent rate.

Mortgage rates fall November and the buyer maths

A lower rate helps, but the maths remains tough for many households. At 7.18 percent, the monthly payment on a typical home is still far above the levels buyers enjoyed when rates were near 3 percent, and the income needed to afford the typical home was put at $109,796 in a June affordability reading. About 21.2 percent of listings had price drops in the Redfin data, and homes sat a median of 50 days on the market, giving buyers more time and more room to negotiate than in the frenzied market of recent years. For those who can afford the payment, the third straight weekly fall is a reason for cautious optimism; for those on the edge, a few basis points will not change the decision. The next Freddie Mac survey will show whether the easing continues or stalls.

Source: LendingTree