Sliding Rates Cut $140 From Monthly Mortgage Payments
Home buyers can expect more savings as borrowing costs continue to decline from their peak in late 2022.
Lower mortgage rates are giving buyers a boost at the start of the spring homebuying season. The 30-year fixed-rate mortgage dropped to 6.28% this week, the fourth straight week of declines, Freddie Mac reports. While rates are still higher than they were a year earlier, they’ve gradually scaled back from a 7% peak at the end of 2022.
“Compared to the recent 7% peak, the latest rate saves $140 per month for a home buyer on a $300,000 loan,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “Though week-to-week rate changes can move up and down, the longer-term prospect on rates is for further improvement, with a clear possibility of rates going under 6% by the year’s end.”
Market dynamics are setting the stage for Yun’s prediction. Robust apartment construction in recent years has led to rising vacancies, which likely will temper rent growth and inflation, Yun says. “The Federal Reserve can, therefore, stop tightening,” which could ease the pressure on mortgage rates, he adds. “With lower rates, more home buyers will steadily appear. That is why it is critical to ensure more housing supply to help meet the recovering demand.”
Housing inventory remains at historic lows. As such, even in a slower housing market compared to 2022 levels, multiple offers and bidding wars are still present in many places as buyers scramble for limited choices.
Freddie Mac reports the following national averages for mortgage rates in the week ending April 6:
- 30-year fixed-rate mortgages: averaged 6.28%, falling from last week’s 6.32% average. Last year at this time, 30-year rates averaged 4.72%.
- 15-year fixed-rate mortgages: averaged 5.64%, rising from last week’s 5.56%. A year ago, 15-year rates averaged 3.91%.