US mortgage rates pull back after three straight weeks of gains
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MORTGAGES rates in the US dropped after a three-week run of gains that sent borrowing costs to a two-decade high.
The average for a 30-year, fixed loan fell to 6.95 per cent after surging past 7 per cent last week, Freddie Mac said on Thursday (Nov 3) in a statement.
Even with the latest decline, mortgage rates have more than doubled this year. High borrowing costs have pushed out many would-be buyers from the market, weakening demand and fuelling a drop in home prices.
“Mortgage rates continue to hover around seven per cent, as the dynamics of a once-hot housing market have faded considerably,” said Sam Khater, Freddie Mac’s chief economist. “Unsure buyers navigating an unpredictable landscape keeps demand declining, while other potential buyers remain sidelined from an affordability standpoint.”
The Federal Reserve’s campaign to further squash inflation has led it to hike its benchmark rate even more, boosting that by another 75 basis points on Wednesday.
“Yesterday’s interest rate hike by the Federal Reserve will certainly inject additional lead into the heels of the housing market,” Khater said.
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This year’s climb in home-borrowing costs now means the monthly payment on a US$300,000 mortgage would total nearly US$1,986, US$685 more than in January when the 30-year average was 3.22 per cent.
The market’s shift has hit real estate companies and fuelled job cuts in recent months. Opendoor Technologies, which practises a data-driven spin on home-flipping called iBuying, announced on Wednesday it was laying off about 550 employees, or about 18 per cent of its workforce, because the company’s facing “one of the most challenging real estate markets in 40 years,” according to chief executive officer Aeric Wu. BLOOMBERG
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