Mortgage rates in the U.S. fell for a fourth straight week.
The average for a 30-year, fixed loan was 6.28%, down from 6.32% last week and the lowest in almost two months, Freddie Mac said in a statement Thursday. Treasury yields that guide mortgage rates have slid as recent data releases signaled a potential slowdown in economic growth.
After peaking at just over 7% last year, borrowing costs are again approaching 6%, a “key threshold” for homebuyer confidence, according to Scott Buchta, head of fixed-income strategy at Brean Capital. A one percentage point drop in rates equates to a 10% decline in principal and interest payments and an 11% increase in purchasing power, Buchta said.
Cheaper mortgages and softening prices may coax more house-hunters off the fence during the prime spring selling season in the US. But they may have trouble finding attractive deals in many areas where listings for move-in-ready homes are scarce.
Rates may have to drop quite a bit more to spur a meaningful gain in inventory. Most current homeowners have mortgages below 4%, according to data from Black Knight Inc., giving them little incentive to move and trade up to more-expensive loans.
At the current 30-year average, monthly payments for a $600,000 loan would be $3,706. That’s about $1,100 more than at the start of last year, when rates were close to 3%.
