A mortgage rate is the rate of interest charged on a mortgage. Mortgage rates are determined by the lender and can be either fixed, staying the same for the term of the mortgage, or variable, fluctuating with a benchmark interest rate. Mortgage rates vary for borrowers based on their credit profile. Mortgage rate averages also rise and fall with interest rate cycles and can drastically affect the homebuyers’ market.
The average long-term U.S. mortgage rate inched down for the fifth straight week, positive news for potential homebuyers and the real estate market. The average on the benchmark 30-year rate ticked down to 6.27% from 6.28% the previous week. The average rate last year at this time was 5%. The recent decline in mortgage rates is good news for prospective homebuyers, many of whom were pushed to the sidelines during the past year as the Federal Reserve raised its main lending rate nine straight times in a bid to beat back stubborn, four-decade high inflation. Though supply remains low, home prices are retreating slightly, another development that could lure buyers back into the market.
The Federal Reserve will likely have to cut its benchmark lending rate before summer, as the fallout from the U.S. banking crisis triggers a potential credit crunch that could threaten broader economic growth. A full 25 basis point rate cut is expected in July, with the odds of a larger 50 basis point reduction rising to 53.2%.
This could be great news for prospective homebuyers!
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