The Federal Reserve’s signal that it doesn’t plan to raise interest rates for the rest of the year are quickly sending mortgage rates lower.
The average 30-year fixed rate mortgage has dropped to 4.34% from 4.4%, taking it to a 52-week low, according to Mortgage News Daily. That could be the shot in the arm the housing market needs to get out of its current lull.
The new rate is significantly lower than the 5.05% rates hit last October, which was the highest level for a home loan since February 2011. As a result of that surge, sales tumbled in November and December.
The Fed on Wednesday, following its two-day meeting, said it would be “patient” as it monitors data for changes in the economy or inflation pressures. Eleven of the 17 Fed officials helping to set interest-rate policy said they saw no need to raise rates this year. Only two held that opinion in December.
After the announcement, the yield on the 10-year Treasury fell to its lowest level since January 2018. Mortgage rates tend to track with the 10-year Treasury, meaning they could continue to go lower in the months to come.
It’s worth noting, however, that the Fed also lowered its economic forecast. So while mortgage rates might be lower, the big question for the real estate industry is whether consumer confidence will be strong enough to boost home sales.