Mortgage rates are falling for the fourth consecutive week

Washington, DC

Mortgage rates fell slightly this week, as a smaller rate hike by the Federal Reserve indicated a promising improvement on inflation.

The average 30-year mortgage rate was 6.09% in the week ended February 2, down from 6.13% in the previous week, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed interest rate was 3.55%.

After rising for much of 2022, spurred by aggressive rate hikes by the Fed to tame spiraling inflation, mortgage rates have been trending lower since November, along with data that continues to show inflation has peaked.

Mortgage rates have not been this low since September and are now below last year’s peak of 7.08%, which was last reached in early November.

“This one percentage point reduction in rates could allow up to three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” said Sam Khater, chief economist at Freddie Mac.

The Fed agreed to a Quarter point interest rate On Wednesday, it is the smallest since March. The move to slow the pace of increases sends a clear signal that the central bank is making progress in its battle with inflation.

While the Fed does not directly set the interest rates that borrowers pay on mortgages, its actions do affect them. Mortgage rates tend to track the yield on the 10-year US Treasury note, which moves based on a mix of anticipation about Fed action, what the Fed is actually doing and investor reaction. When Treasury yields rise, so do mortgage rates; When mortgage rates go down they tend to follow.

As inflation pressures eased, mortgage companies followed suit, said George Ratiu, director of economic research at, bringing down the cost of borrowing.

He said the impact of the Fed’s actions is keeping mortgage rates lower in the short term, adding that he expects rates to remain around 6% over the next few weeks.

said Mike Fratantoni, senior vice president and chief economist at Mortgage Bankers Association. “And investors are betting that the economic slowdown and the Fed’s eventual victory over inflation will lead to lower interest rates over time.”

MBA expects mortgage rates to decline slightly through 2023, to end near 5%.

Other economic data plays a role in how mortgage rates move, including jobs and inflation reports.

“Most recent indicators point to an economy that remains resilient,” Ratiu said. The labor market remains tight despite the Fed’s efforts to cool the economy: Wednesday’s Employment Opportunity and Employment Turnover Survey, or JOLTS, showed There were 11 million jobs in December, the highest level since July.

Housing economists and those who work in the mortgage market are looking forward to the next report on inflation, due on February 14, to see if the pace of price increases slows.

Even as interest rates have fallen in recent weeks, mortgage applications fell 9% last week compared to the week before, according to the MBA.

“Overall application activity declined last week, although rates were lower, which is an indication of what remains a volatile time of year for housing activity,” said Joel Kahn, MBA vice president and deputy chief economist. “Buying activity is expected to pick up as the homebuying season begins in the spring, supported by lower rates and moderate home price growth. Both trends will help some buyers regain purchasing power.”

For the housing markets, Ratiu said, lower interest rates eased the financial burden on homebuyers.

Housing market data for January showed an increasing number of homes for sale, real estate lingering on the market longer, and prices down 11% from their peak in 2022, according to

“For today’s average-priced homebuyer, the down payment amount is lower than it was last summer,” Ratiu said. “While this is positive news, affordability remains a major challenge, especially for first-time buyers.”

The average mortgage rate is based on the mortgage applications Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers who have given a 20% decrease and have excellent credit. Many buyers who offer less money up front or have less than ideal credit will pay more than the average price.

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