For the fourth consecutive week, the average long-term mortgage rate in the U.S. dropped, providing a positive outlook for potential homebuyers and a real estate market that has struggled since the Federal Reserve began raising interest rates more than a year ago.
The rate for a 30-year fixed mortgage dipped to 6.28% from 6.32% the previous week, according to mortgage buyer Freddie Mac. It's a significant improvement from the two-decade high of 7.08% reached last fall, but still 4.16% higher than it was one year ago.
Lower mortgage rates can bring a much-needed sigh of relief to prospective homebuyers who may have been pushed out of the market over the past year.
The Federal Reserve has raised its main borrowing rate nine times since last March in an effort to reduce persistent, four-decade-high inflation.
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While the inventory of available homes remains low, prices are showing signs of stabilization.
According to the National Association of Realtors, the median home price in the U.S. dipped to $363,000 in February, marking the first annual decline in 13 years. Additionally, existing home sales jumped 14.5% in February, snapping a 12-month slide.
"Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines," said NAR Chief Economist Lawrence Yun. "Moreover, we're seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs."
While the Federal Reserve's rate hikes have a broad impact on borrowing rates, mortgage lenders usually track the 10-year Treasury yield when determining home loan pricing.
The collapse of two U.S. banks last month caused significant fluctuation in the Treasury yields. The yield on the 10-year Treasury was around 3.35% Thursday morning, down from its March high of 4.07%.
The rate on a 15-year fixed mortgage, which is popular for those looking to refinance their homes, ticked up slightly this week to 5.64%, up 1.73% from a year ago.