According to Mortgage News Daily, the average 30-year fixed-rate mortgage rate has dropped to 5.99%.
Since a brief blip in early September, the housing market hasn’t seen a rate with a five handle. Previously, it was in early August.
The rate began this week at 6.21% and fell sharply on Wednesday after Federal Reserve Chairman Jerome Powell stated that inflation “has eased somewhat but remains elevated,” a departure from the previous language.
Bond yields fell as a result, and mortgage rates closely track the 10-year Treasury yield.
“Measured steps can continue as long as the economic and inflation data is there to support them. This means that rates can fall into the 5′s but are unlikely to rush into the 4′s,” said Matthew Graham, chief operating officer at Mortgage News Daily. “I’m not saying it won’t happen; I’m just saying it will take a little longer than some of the rate rallies we’ve seen in the past.”
Mortgage rates peaked in October, with the 30-year fixed rate at 7.37%, and have since fallen. That means savings for prospective homebuyers. The monthly payment for a consumer purchasing a $400,000 home today with a 20% down payment is $293 less than it would have been in October.
Lower interest rates appear to be boosting buyer interest.
Pending home sales, which track signed contracts on existing homes, increased for the first time in six months in December. According to the National Association of Realtors, they increased by 2% from November.
Stocks of the nation’s homebuilders have been soaring since interest rates began to fall, with several reaching 52-week highs on Thursday. The US Home Construction ETF has reached a new one-year high, rising more than 3% on the day.