Mortgage rates in the United States may have been soaring above 7 percent about a month ago, but that is not the case right now says the Mortgage Bankers Association. According to their seasonally adjusted index, mortgage rates are down to 6.5 percent. Of course, mortgage loan application volume, last week, is down 0.8% from the week before. This analysis includes a Thanksgiving holiday observance adjustments.
Specifically, the average contract interest rate for a 30-year fixed rate mortgage—with conforming loan balances (up to $647,200)—slipped down from 6.67 percent to 6.49 percent. This rate includes points remaining at 0.68 (which also includes the origination fee) on loans that have a down payment amount of 20%.
On top of that, the 30-year fixed rate has already fallen by 65 basis points across the last three weeks, reminiscent of another similar stretch in 2008. With pressure over a potential recession, counter to indications that inflation is cooling, economists are now waiting for the Federal Reserve bank to reduce the frequency of future interest rate increases.
For 15-year fixed rate home loans, the average rate has also fallen, though be a smaller margin. These loans now carry an interest rate of 5.98 percent, which is only slightly down from 5.90 percent last week. While that may not seem quite so notable, the 15-year mortgage rate average one year ago was only 2.42 percent.
But despite these falling interest rates, many buyers still feel like prices are too high to dive into the market right now. Sure, new home mortgage applications may be up 4 percent from last week, but overall demand is actually down more than 40 percent over the same week from a year ago.
In addition, existing home sales are also still falling. Adjustable-rate mortgages are actually up, a little, to 9% this week, though that is still down from the 12% range from last month.
Other metrics suggest the same state of struggle for the housing market as well. Pending sales, for one, plummeted more than 32 percent in October, year-over-year. That marks the measure’s biggest slip on record. Secondly, nearly 60,000 home-purchase agreements failed to process, occupying 17.9 percent of those deals.
