Mortgage rates fell to a 10-month low, mortgage buyer Freddie Mac said Thursday.
Freddie Mac’s latest Primary Mortgage Market Survey, released Thursday, showed the average rate on the benchmark 30-year fixed mortgage fell to 6.56% from last week’s reading of 6.58%.
The average rate on a 30-year loan was 6.35% a year ago.
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“Purchase demand continues to rise on the back of lower rates and solid economic growth,” said Sam Khater, Freddie Mac’s chief economist. “Though many potential homebuyers still face affordability challenges, consistently lower rates may provide them with the impetus to enter the market.”
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Meanwhile, the average rate on the 15-year fixed mortgage is unchanged from last week’s reading of 5.69%. One year ago, the rate on the 15-year fixed note averaged 5.51%.
The welcome news of lower rates comes as a recent report from Realtor.com found that fewer than 30% of homes on the U.S. housing market are affordable for the average household.
As of August, only 28% of homes on the market were priced within reach of the typical household, with the maximum affordable home price for a median-income household falling to $298,000. In 2019, that figure was $325,000, according to the real estate firm’s Buying Power Report. This means buying power is down by nearly $30,000 nationally since 2019, even though the median income rose by 15.7%.
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Higher mortgage rates are largely to blame, according to Realtor.com chief economist Danielle Hale.
“Even as incomes grow, higher interest rates have eroded the real-world purchasing power of the typical American household,” Hale said, noting that “this dynamic is forcing many buyers to adjust their expectations, whether that means looking for smaller homes, moving farther out, or delaying the dream of homeownership altogether.”
Home prices and interest rates have risen so significantly that they reduced homebuying to its lowest level since the mid-1990s, according to the annual State of the Nation’s Housing report from the Joint Center for Housing Studies (JCHS) of Harvard University.
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