Mortgage rates fell this week after surpassing 7% for the first time in 20 years last week.
The 30-year fixed-rate mortgage averaged 6.95% in the week ending November 3rd, down from 7.08% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate stood at 3.09%.
Mortgage rates continue to hover around 7%, causing the once-hot housing market to cool considerably, said Sam Khater, Freddie Mac’s chief economist.
Mortgage rates had risen almost every week since late August and have more than doubled since the beginning of the year.
The rapid rise has been fueled by the Federal Reserve’s unprecedented campaign of hiking interest rates in order to tame soaring inflation. The combination of the central bank’s rate hikes, investor’s concerns about a recession and mixed economic news has made mortgage rates increasingly volatile over the past several months.
The Fed announced yesterday it would raise its benchmark interest rate by another 75 basis points, the sixth rate increase this year and the fourth-consecutive hike of that size.
“Yesterday’s interest rate hike by the Federal Reserve will certainly inject additional lead into the heels of the housing market,” Khater said.
He added that demand is declining as buyers navigate the unpredictable landscape, while other potential buyers remain sidelined because they can not qualify for a loan.
This is a developing story and will be updated.