U.S. mortgage rates have posted the biggest drop since 1981 

Real Estate News

The average rate for a 30-year fixed mortgage was 6.61%, the lowest level in almost two months, Freddie Mac said in a statement Thursday.

Mortgage rates in the United States faced the biggest weekly decline in nearly 41 years, providing some relief after a rapid run-up that quickly priced out home buyers. 

The average rate for a 30-year fixed mortgage was 6.61%, the lowest level in nearly two months, Freddie Mac said in a statement Thursday. Last week, the average was 7.08%.

The results reflect a change in Freddie Mac’s methodology that the company says will provide a broader, more accurate view of the mortgage market. Instead of surveying lenders, it now uses data collected by its automated underwriting system to calculate average rates. 

Borrowing costs tracked a decline in yields for 10-year Treasuries after the government reported last week that inflation eased in October. Investors are viewing the consumer-price data as a sign that the Federal Reserve may begin to temper its interest-rate hikes in the coming months. Fed Chair Jerome Powell, however, has said it’s premature to consider a pause.

“Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked,” said Sam Khater, Freddie Mac’s chief economist. “While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market. Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact.”

Mortgage rates that have doubled this year have depressed demand for homes, causing builders to pull back on construction and pushing sellers to cut their asking prices. While the latest decline in rates offers a reprieve, the recent volatility in borrowing costs is “causing a large degree of uncertainty” for both house-hunters and owners considering listing their properties, said George Ratiu, manager of economic research at Realtor.com. 

“Some buyers may want to wait and see if rates will drop even lower,” Ratiu said. “However, with inflation still north of seven percent and the Fed committed to keep increasing the funds rate over the next few months, the mortgage market is not out of the woods. We may still see rates rebound back above seven percent before the end of the year.”