US mortgage rates fall for a fourth week, sending 30-year to 6.33%

MORTGAGE rates in the US fell for a fourth week, offering hope that improved affordability will bring more buyers to the flagging housing market.

The average for a 30-year, fixed loan slid to 6.33 per cent from 6.49 per cent last week, Freddie Mac said in a statement on Thursday (Dec 8).

That’s down from 7.08 per cent last month. Prior to this year, the measure hadn’t climbed above 7 per cent since 2002.

This year’s surge in borrowing costs has shut out would-be buyers and kept inventory tight because few homeowners want to sell if it means trading a low-rate loan for a more expensive one.

Over the past four weeks, mortgage rates have tumbled three quarters of a point, the largest drop since 2008, Freddie Mac data show. That may provide some incentive for home shoppers still on the fence, who might finally see a way into a deal they can afford.

But in general, buyer sentiment remains low because of uncertainty over the economy, according to Sam Khater, Freddie Mac’s chief economist.

Falling apartment rents, a weakening housing market and other indicators such as softening used car prices are raising hopes that inflation has peaked, said Greg McBride, chief financial analyst at Bankrate.com. That’s pushing down yields on the 10-year Treasuries that mortgage rates typically track.

Borrowing costs “have to fall quite a bit more before we can expect it to have any positive impact on sales”, McBride said. At the same time, “sharply lower mortgage rates would indicate a much weaker economy, and that’s not the type of economy that tends to induce home sales”.

Investors are awaiting November data on consumer prices and the Federal Reserve’s next move on interest rates, both due next week.

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