Breaking: U.S. Mortgage Rates Hit 3-Week Low

U.S. mortgage rates have dropped for the third consecutive week, reaching their lowest point since late September, according to a Freddie Mac survey. This decline suggests increased housing market affordability as falling yields in the Treasury market contribute to lower home borrowing costs.

U.S. mortgage rates have dropped for the third consecutive week, reaching their lowest point since late September. This decline suggests that falling yields in the Treasury market, which largely determine home borrowing costs, may be contributing to increased housing market affordability. According to a Freddie Mac survey released on Thursday, the average rate on 30-year fixed-rate mortgages fell to 7.44% from 7.50% the previous week. This softening comes after rates hit a 23-year high of 7.79% three weeks ago, although they are still significantly higher than the 6.61% recorded at this time last year.

The increase in mortgage rates began last year as the Federal Reserve tightened interest rates in an effort to combat inflation. As a result, rates on home loans climbed to their highest levels in over two decades, coinciding with 10-year Treasury yields reaching their highest point since 2007 last month. However, some economists now anticipate a continued decline in mortgage rates as the spread between 10-year Treasury yields and 30-year mortgage rates narrows. This week, yields on 10-year Treasury notes dropped below 4.50% following lower-than-expected inflation readings, reinforcing investors' belief that the Fed has finished raising interest rates. Earlier this month, the Fed opted not to raise its policy benchmark borrowing rate for a second consecutive meeting, maintaining it within the current range of 5.25%-5.50%.

The decrease in bond yields and mortgage rates has the potential to enhance housing affordability. According to the Mortgage Bankers Association, the national median mortgage payment for a new mortgage decreased by $15 in September from the previous month's $2,170.

In conclusion, the recent decline in U.S. mortgage rates, coupled with the narrowing spread between 10-year Treasury yields and 30-year mortgage rates, may contribute to improved housing market affordability. This trend is expected to continue as the Federal Reserve refrains from further interest rate hikes.