US mortgage rates fall for second week, sending 30-year to 6.42%

MORTGAGE rates in the US fell for a second straight week, easing costs for homebuyers in the market’s busiest season.

The average for a 30-year, fixed loan was 6.42 per cent, down from 6.6 per cent last week, Freddie Mac said in a statement on Thursday (Mar 23). It was the biggest one-week decline since mid-January.

Investors are assessing the fallout from four bank failures and the potential impact of the Federal Reserve’s latest interest-rate bump. Policymakers announced a quarter-point increase Wednesday while sticking to their outlook that more hikes might be needed to tame inflation.

For the housing market, “the news is more positive” as demand ticks up and prices stabilise, Sam Khater, Freddie Mac’s chief economist, said in the statement. “If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season.”

So far, the season is off to a slow start, with buyers put off by still-high prices and current owners reluctant to trade away mortgages they may have locked in when rates were at historic lows.

At the current 30-year average, the monthly payment on a US$600,000 loan would be US$3,761. That’s up from US$3,012 a borrower would have paid a year ago, when rates were two percentage points lower.

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“Home shoppers are looking to find the optimal combination of prices and mortgage rates before entering the market,” said Hannah Jones, economic data analyst at Realtor.com. “However, elevated rates and high prices mean that point doesn’t yet exist in the market for many would-be buyers.” BLOOMBERG