Source: Forbes —
Mortgage rates slipped below 7% this week, but it wasn’t enough to boost housing activity as mortgage applications continued to decline amid the Federal Reserve hiking its benchmark interest rate for the sixth time this year.
The average 30-year, fixed-rate mortgage dipped to 6.95% the week ending November 3, according to Freddie Mac. This is a 13 basis-point drop from last week (a basis point is one-hundredth of a percentage point), and the first decline in rates in three weeks. Still, mortgage rates have more than doubled since early January, when the average 30-year, fixed-rate was 3.22%.
The 15-year, fixed-rate mortgage averaged 6.29% this week, down from 6.36% last week but up from 2.35% a year ago.
The average 5/1 adjustable-rate mortgage (ARM) was at 5.95%, down slightly from 5.96% last week but up from 2.54% a year ago. As borrowing costs have surged, ARMs have become more popular since they now have a lower rate than fixed-rate mortgages. The share of ARM applications made up 11.8% of all applications for mortgages for the week ending October 28, down from 12.7% the week before, according to the Mortgage Bankers Association (MBA). ARMs comprised just 3% of all mortgage applications in January 2022.
The rates above don’t include fees or other costs associated with obtaining home loans.
Mortgage Rates Forecast Into 2023
Mortgage rates have hit some extreme highs and lows this year, with the 30-year, fixed-rate dropping down to 4.99% on August 4 then hitting a 20-year high of 7.08% last week. Rising rates have been due, in part, to the Fed’s aggressive strategy of hiking the federal funds rate six times this year in an effort to tamp down inflation.
The Fed has signaled that its monetary policy tightening is likely to continue, which will indirectly impact mortgage rates. Long-term mortgage rates are directly tied to the bond market, which reacts to the Fed’s actions and monetary policy.
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