The average interest rate for 30-year fixed-rate mortgages in the United States slightly decreased this week, remaining within a narrow range over the past two months.
According to mortgage financing institution Freddie Mac, the average interest rate for these long-term mortgage loans dropped from 6.21% last week to 6.18% this week. A year ago, the average rate was 6.85%.
However, the borrowing cost for 15-year fixed-rate mortgages increased slightly this week, a type of loan popular among homeowners seeking mortgage refinancing. The current average rate stands at 5.50%, higher than last week’s 5.47%. Freddie Mac reported that a year ago, the average rate for this type of mortgage was 6%.
Mortgage interest rates are influenced by multiple factors, including the Federal Reserve’s rate policies, bond market investors’ expectations of the economy and inflation. Generally, mortgage rates tend to follow the 10-year Treasury yield, which loan institutions use as a key reference for pricing mortgages.
As of midweek, the 10-year Treasury yield was 4.15%, slightly higher than last week’s 4.12%.
The average rate for 30-year fixed-rate mortgages has remained relatively stable in recent weeks since reaching a low of 6.17% on October 30, the lowest point in over a year.
Expectations of the Federal Reserve cutting rates starting in September and continuing into November have contributed to the decline in mortgage rates since July.
Although the Federal Reserve does not directly set mortgage rates, its actions regarding rate policies directly impact the 10-year Treasury yield, which in turn indirectly affects the level of mortgage rates.
However, a rate cut by the Federal Reserve does not always translate to a decrease in mortgage rates.
In November, existing home sales in the United States increased month-over-month, but the total sales volume for the first 11 months of this year decreased by 0.5% compared to the same period last year.
Economists generally predict that the average interest rate for 30-year fixed-rate mortgages will remain slightly above 6% next year.
(This article referenced reporting from ABC News)