Mortgage rates drop below 7%, pushing homebuyers to seize the moment

U.S. homebuyers finally get some good news. After rising for most of 2022, mortgage rates slipped below 7 percent in November. This is the first significant decrease in interest rates in the past several months. 

The average mortgage rate for a 30-year home loan fell to 6.58 percent as of November 23, according to Freddie Mac. As soon as the rates dropped below 7 percent, the mortgage application volume began to increase. Homebuyers across the country are trying to take advantage of this window of opportunity and save some money on their monthly payments.

In one week, the volume of applications for a home loan rose 2.2 percent on a seasonally adjusted basis, according to the data from Mortgage Bankers Association (MBA). However, as interest rates continue to remain elevated, fewer people are applying for a mortgage than a year ago. Mortgage applications are down 46 percent compared to November 2021. 

Mortgage rates went down after two government reports – Consumer Price Index and Producer Price Index, showed that prices rose slower than expected in October. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index increased by 0.3 percent in October, down from 0.6 percent in September. Unfortunately, it is still too early to assume that interest rates will continue to fall in the following months.  

“Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked,” said Freddie Mac’s Chief Economist Sam Khater. “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.”

The new market outlook from Realtor.com shows that only 16 percent of respondents believe it is a good time to buy a home. High home prices and high mortgage rates are the two main reasons why Americans feel unmotivated to join the sales market. However, with the right planning, homebuyers still have a chance to find great deals and get the upper hand when negotiating the asking price. 

Resources:

“Mortgage Rates Tick Down,” (Freddie Mac, 2022)

"Mortgage Applications Increase in Latest MBA Weekly Survey," by Falen Taylor (Mortgage Bankers Association, 2022)

“Mortgage Applications Increase in Latest MBA Weekly Survey,” by Falen Taylor (Mortgage Bankers Association, 2022)

“US Mortgage Rates Drop Below 7% in Biggest Decline Since July,” by Molly Smith (Bloomberg, 2022)

“Mortgage Rates Plunge As Inflation Shows Signs Of Cooling,” by Robin Rothstein (Forbes Advisor, 2022)

“Mortgage rates plunge, largest weekly drop since 1981,” by Anna Bahney (CNN, 2022)

“Home Purchase Sentiment Declines in October,” (Realtor.com, 2022)

“Mortgage Rates Are Retreating From 7%. They Probably Won’t Stay This Low for Long.” by Shaina Mishkin (Barron’s, 2022)