US mortgage rates drop, easing pressure on potential homebuyers

MORTGAGE rates in the US declined, offering a bright spot for would-be homebuyers.

The average for a 30-year fixed loan was 6.81 per cent, down from 6.84 per cent last week, Freddie Mac said on Thursday (Nov 28).

Borrowing costs are much higher than two months ago, when the average on a 30-year mortgage dropped to a low of 6.08 per cent. Higher rates have ramped up affordability pressures, with buyers now paying about US$3,916 for monthly mortgage payments on a US$600,000 home, up US$288 from two months earlier.

Some shoppers are forging ahead. In October, contracts to buy previously owned homes rose to a seven-month high, according to the National Association of Realtors.

Yields on 10-year Treasuries have eased recently as investors reassess the inflationary impact of Donald Trump’s potential policies. In October, a measure of inflation accelerated from a year earlier, showing strength as the Federal Reserve weighs the potential for more rate cuts.

Declining yields have come amid “growing certainty over president-elect Trump’s Cabinet and policy plans, especially details surrounding his pick for Treasury Secretary in Scott Bessett as well as details on the breadth and depth of tariffs on overseas goods”, said Ralph McLaughlin, senior economist at Realtor.com. “This should continue to put downward pressure on mortgage rates to the first week of December.” BLOOMBERG