The average long-term U.S. mortgage rate declined for the fourth week in a row, a sign of relative stability that could potentially open the door for some prospective homebuyers to get back in the market.
The average long-term rate reached a two-decade high of 7.08% in late October and early November as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and tame inflation.rate 0.25 percentage points, its eighth increase in less than a year. That pushed the central bank’s key rate to a range of 4.5% to 4.75%, its highest level in 15 years.
Though those rate hikes do impact borrowing rates across the board for businesses and families, rates on 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.
The National Association of Realtors reported earlier this month that existing U.S. home sales totaled 5.03 million last year, a 17.8% decline from 2021. That is the weakest year for home sales since 2014 and the biggest annual decline since 2008, during the housing crisis of the late 2000s.