US mortgage rates drop for fifth straight week, falling to 6.85%

MORTGAGE rates in the US declined for a fifth week, pushing borrowing costs to the lowest point since late December.

The average for 30-year loans was 6.85 per cent, down from 6.87 per cent last week, Freddie Mac said.

While mortgage rates have been easing for more than a month, they have been stuck above 6.5 per cent since late October. High borrowing costs are causing many potential buyers to pull back, keeping a lid on sales. But the fact that rates have hovered in a fairly tight range could help reassure buyers, according to Sam Khater, Freddie Mac’s chief economist.

“This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season,” Khater said.

Supply constraints that have plagued the housing market in recent years are starting to ease. In the four weeks to Feb 16, new listings rose 4.2 per cent from a year earlier to the highest level in three years, according to Redfin.

The US Federal Reserve’s policy risks keeping mortgage rates higher for longer. Minutes released on Wednesday (Feb 19) showed that policymakers expressed a readiness to hold interest rates steady at their meeting in January. BLOOMBERG