Borrowing costs have fallen a full percentage point since November, enabling millions more potential buyers to reenter the market.
The 30-year fixed-rate mortgage is nearly a full percentage point lower than its 7.08% peak in mid-November, helping affordability and offering millions of potential home buyers to reenter the housing market.
Even as the Federal Reserve voted this week to raise its benchmark rate by another quarter of a point, mortgage rates continued to inch downward. The mortgage market likely already priced in the latest Fed rate, says Nadia Evangelou, senior economist and director of real estate research at the National Association of REALTORS®. What’s more, as inflation readings head down, the Fed hinted it would be eyeing smaller rate hikes moving forward. That could mean mortgage rates will be even less impacted by any of the Fed’s future increases, Evangelou says.
“There is finally light at the end of the tunnel for many Americans, as they now earn more than the income needed to purchase a mid-priced home,” Evangelou says. With rates now below 6.1%, many Americans earn about $5,000 more annually than the qualifying income needed to purchase a home, she adds.
The one-percentage-point reduction in mortgage rates since November will enable up to 3 million more mortgage-ready consumers to afford a $400,000 loan, the median home price, according to Freddie Mac’s research.
Freddie Mac reported the following national averages with mortgage rates for the week ending Feb. 2:
- 30-year fixed-rate mortgages: averaged 6.09%, dropping from last week’s 6.13% average. A year ago, 30-year rates averaged 3.55%
- 15-year fixed-rate mortgages: averaged 5.14% this week, down from last week’s 5.17% average. Last year at this time, 15-year rates averaged 2.77%.