Latest mortgage news: Rates Keep Falling

In a bit of hopeful news for the housing market, mortgage rates continue to pull back. The average rate on 30-year mortgages fell to 6.27 percent this week from 6.3 percent the previous week, according to Bankrate’s national survey of large lenders.

“Mortgage rates declined for the third straight week, which is good news for potential homebuyers looking ahead to the spring homebuying season. Mortgage rates on most loan types decreased last week and the 30-year fixed rate reached its lowest level since September 2022 at 6.2 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Overall applications increased with both gains in purchase and refinance activity, but purchase applications remained almost 39 percent lower than a year ago. Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market. Many have been waiting for affordability challenges to subside.”

Where mortgage rates are headed

Mortgage experts see rates decreasing over the coming year as the Fed’s round of rate hikes draws to an end. Mark Fleming, chief economist at title insurer First American, expects rates to keep falling.

“Depending on what the 10-year Treasury does in the coming days, we might even go below 6,” Fleming says. ‘There is a good chance that mortgage rates will continue to decline.”

Mortgage rates typically move in lockstep with the 10-year Treasury. The average rate on a 30-year loan usually is 1.5 to 2 percentage points above the 10-year rate. But in the turbulent times of 2022, that gap — known as the “spread” — widened to more than 2.5 percentage points.

“The spread between mortgage rates and the 10-year Treasury has been abnormally wide since early 2022,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association. “Further narrowing of that spread is expected to put downward pressure on mortgage rates in the coming months.”

“Purchase activity that was put on hold last year due to the quick run-up in rates is gradually coming back as rates ease and housing demand remains strong, driven by supportive demographics and the ongoing strength in the job market,” Kan says.

Citation: 

Ostrowski, J. (2023, February 8). As economy slows, mortgage rates retreat. Bankrate. Retrieved February 14, 2023, from https://www.bankrate.com/mortgages/analysis/

Taylor, F. (2023, January 25). Mortgage applications increase in latest MBA Weekly Survey. MBA. Retrieved February 14, 2023, from https://www.mba.org/news-and-research/newsroom/news/2023/01/25/mortgage-applications-increase-in-latest-mba-weekly-survey