US mortgage rates plunge to 5.3% in biggest drop since 2008

Mortgage rates in the US posted the biggest 1-week decline since 2008.

The average for a 30-year loan fell to 5.3 per cent, the lowest in a month and down from 5.7 per cent last week, Freddie Mac said in a statement on Thursday (Jul 7).

Buyers are getting a slight reprieve from this year's massive rise in rates that has started to cool parts of the US housing market. The jump in costs has pushed more buyers out of the real estate hunt, causing inventory to increase. Sellers have started to cut prices in certain areas. 

"While the drop provides minor relief to buyers, the housing market will continue to normalise if home-price growth materially slows due to the combination of low housing affordability and an expected economic slowdown," said Sam Khater, Freddie Mac's chief economist. 

Even as price gains start to decelerate slightly, the market is the least affordable since the mid-1980s, numbers from mortgage data provider Black Knight showed.

At the current 30-year average, a borrower with a US$300,000 mortgage would pay roughly US$1,665 a month, about US$383 more than at the end of last year, when rates hovered around 3.11 per cent. Bloomberg

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