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As mortgage rates fall for a fifth week, experts say the market has tilted ‘slightly more in favor of buyers’ although ‘affordability hurdles’ continue


'A welcome development': As mortgage rates fell for a fifth week, experts say the market has tilted 'slightly more in favor of buyers' despite 'affordability hurdles' pay' continues

‘A welcome development’: As mortgage rates fell for a fifth week, experts say the market has tilted ‘slightly more in favor of buyers’ despite ‘affordability hurdles’ pay’ continues

Mortgage rates continue to weaken for the fifth week in a row, after Fed announces seventh rate hike of year.

Sam Khater, chief economist at Freddie Mac, pointed to “weaker inflation data and a modest shift in Federal Reserve monetary policy” as the cause of the continued decline.

Latest Consumer price index A report from the Bureau of Labor Statistics indicates that inflation may be slowing, with prices rising less than expected in November.

And even though federal interest rate bounced back this week, it’s only up half a point — from the previous gain of 0.75 basis points.

“The good news for the housing market is that the recent drop in interest rates has led to steady buying demand,” Khater speak.

“The bad news is that demand is still very weak in the face of affordability barriers that are still quite high.”

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30-year fixed-rate mortgage

Medium 30 year fixed rate fell slightly to 6.31%, Freddie Mac reported Thursday.

This is down from 6.33% last week and 3.12% a year ago.

“For homebuyers and homeowners, the drop in mortgage rates over the past few weeks has been a welcome development.” speak George Ratiu, director of economic research at Realtor.com.

“With more homes available for sale, and many of them at a discount, some buyers are calculating and finding that slippage rates are providing better options within their budgets. “

Ratiu added that while a return to the 3% range for mortgage rates is unlikely anytime soon, “even a rate cut in the 5.5% – 6.0% range in 2023 will bring giving the housing market an improved foundation.”

15 year fixed rate mortgage

Medium fixed 15 years also fell to 5.54% — from 5.67% the previous week. At this time a year ago, the average 15-year home loan was 2.34%.

Nadia Evangeliou, senior economist for the National Association of Realtors, Note That rate is still more than double what it was a year ago, plus home prices are still high due to limited inventory.

She said that median-income buyers making $75,000 a year “face the most significant housing shortages of any other income group.”

“In a balanced market, these buyers could buy half of the homes for sale. However, these middle-income buyers can only buy 20% of all available listings,” Evangeliou wrote.

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Home price growth slows to single digits

Danielle Hale, chief economist at Realtor.com, speak Last week’s housing data showed further declines from both buyers and sellers.

“Whether holiday cheer or a still bleak outlook on current housing market conditions is the larger driver of the decline is an open question,” Hale wrote. As a result, the housing market balance is tilted slightly more towards the buyers.”

“In fact, the typical price of homes for sale is up ‘just’ 9.5% from a year ago. While this is still higher than the typical home price growth rate, this slowdown marks the first time in 49 weeks — almost a year — that median home prices have increased at a single-digit rate.”

However, Hale predicts home sales will remain low as the Fed keeps interest rates high to stave off inflation. More rate hikes are expected in the new year, and policymakers are predicting the federal funds rate will hit 5-5.25% (currently 4.25-4.5 percent). %) by the end of 2023.

Mortgage, refinancing applications see the leap

While mortgage rates are still three percentage points higher than a year ago, the recent drop has encouraged an uptick in both buying and refinancing activity.

Mortgage applications rose 3.2% while the refinance index rose 3% from the previous week, according to the Mortgage Bankers Association (MBA).

Joel Kan, vice president and chief economist at MBA, suggest “Financial markets have reacted to mixed signals regarding inflation and the Federal Reserve’s next policy moves.”

“Moderate home price growth, coupled with continued declines in mortgage rates, could encourage more buyers to return to the market in the coming months,” Kan added.

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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.

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