Rates for home loans continued their downward slide, and look set to keep falling after the Federal Reserve stuck to its guns on its plans to keep tightening monetary policy.
The 30-year fixed-rate mortgage averaged 4.62% in the December 20 week, mortgage liquidity provider Freddie Mac said Thursday. That was down just one basis point, but it marked the eight consecutive week in which the benchmark home loan product has either declined or stayed flat.
The 15-year fixed-rate mortgage averaged 4.07%, unchanged. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.98%, down from 4.04%.
Fixed-rate mortgages follow the trajectory of the U.S. 10-year note, but they move a bit more slowly. The market turmoil of the past few weeks has been good for home buyers, and investor response to the Federal Reserve’s December meeting may bring even lower rates in coming weeks.
There’s some evidence that consumers are keeping a close eye on rates. Mortgage purchase applications have increased as rates have declined. And sales of existing homes were much stronger than expected in November, a suggestion that Americans are just waiting until market conditions move their way.
That has housing watchers cautiously optimistic that the recent slow patch in the market may prove temporary.
Still, demand hasn’t been the problem in the housing market for the past few years. Supply has, and it’s not clear that home builders are going to step up with properties that most buyers can afford. And if the housing market remains as tight as it has been, it will continue to dissuade homeowners from listing.
Following the release of existing-home sales data on Wednesday, Regions Chief Economist Richard Moody had this to say: “We do think we’ve passed the cycle high for existing home sales, but it’s a long way from ‘past the cyclical peak’ to ‘housing is done’, and we’re just not there yet.”
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