Average US Mortgage Rate Drops to 6.58%

During the past week, the average U.S. mortgage rate fell by half a percentage point to 6.58%, according to Freddie Mac. The rate is down from 6.61% a week ago, according to the mortgage giant. It is the lowest level since September.

The Federal Reserve raised the benchmark borrowing rate by three-quarters of a percentage point last month. It is aimed at taming inflation. A recent government report showed inflation cooled last month. The Fed does not set mortgage rates directly, but the Fed’s bond-buying policy is a big influence on rates.

Mortgage rates tend to follow the yield on 10-year US Treasury bonds. This number has hovered in a range of 3.7% to 3.85%. In late October, the 10-year yield hit a 14-year high.

The 30-year fixed mortgage rate hit a 20-year high last week. Amid inflation reports, the rate moved down a tenth of a percentage point.

The average 15-year fixed mortgage rate also fell a bit. It dropped to 5.90% from 5.98% a week ago. However, the mortgage rates are still more than double what they were a year ago.

Mortgage rates are expected to continue to rise, as the Federal Reserve moves to increase the benchmark borrowing rate to tame inflation. The rate has been inching up steadily since late August.

The Mortgage Bankers Association says mortgage demand has increased. The trade association said purchase applications increased 4% from a week ago. However, some buyers cannot qualify for loans, and lower-income buyers are more likely to stay on the sidelines.

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