Source: USA Today —
Potential buyers remained reluctant to take the plunge on financing a home purchase even as mortgage rates fell for the fourth straight week.
Mortgage applications decreased 2% the week ending Dec. 2 compared to the previous week. And the average loan size for a purchase application was at its lowest level since January 2021.
Meanwhile, the average rate for a 30-year fixed mortgage trended down to 6.33% as of Dec. 8, according to the latest data from Freddie Mac. The fixed-rate mortgage has more than doubled from a year earlier when it averaged 3.1%.
The pandemic-era housing boom, combined with decades-high inflation and volatile mortgage rates, are forcing prospective homebuyers and homesellers to sit on the sidelines and wait for the dust to settle.
“Mortgage rates decreased for the fourth consecutive week, due to increasing concerns over lackluster economic growth,” said Sam Khater, Freddie Mac’s chief economist. “While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates.”
What’s happening with mortgage rates?
Over the last four weeks, mortgage rates have declined by three-quarters of a point, the largest decline since 2008, according to Khater.
In late October, the average rate on a 30-year fixed rate mortgage pushed past 7%. But with signs that inflation is cooling, the Federal Reserve could ease up on its aggressive rate hikes, and mortgage rates could have peaked, =experts say.
The 30-year fixed-rate mortgage averaged 6.33% as of December 8, 2022, down from last week when it averaged 6.49%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.1%.
The 15-year fixed-rate mortgage averaged 5.67%, down from last week when it averaged 5.76%. The 15-year fixed-rate mortgage averaged 2.38% a year ago.
“Despite the ongoing decline in mortgage rates that started in October, prospective homebuyers continue to delay decisions to purchase homes, even as home prices flatten or fall,” says Bob Broeksmit, president and CEO of the Mortgage Bankers Association. “The average loan size for a purchase application last week was at its lowest level in nearly two years, another indication that home prices are cooling.”