Mortgage rates fell for the third week in a row on Thursday, signaling a downward trend some economists predict will continue.
Freddie Mac reported that the average rate on the benchmark 30-year fixed mortgage fell to 7.44% from 7.5% the previous week, but remains markedly higher than the 6.61% average during the same week last year.
The average rate on the 15-year note fell to 6.76%, down from 6.81% the week prior. A year ago, the rate on a 15-year mortgage was at 6.38%.
“For the third straight week, mortgage rates trended down, as new data indicates that inflationary pressures are receding,” said Sam Khater, Freddie Mac’s chief economist. “The combination of continued economic strength, lower inflation and lower mortgage rates should likely bring more potential homebuyers into the market.”
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The Mortgage Bankers Association reported on Wednesday that mortgage applications rose 2.8% last week from the week prior, marking the second straight week of gains and the highest level in five weeks. Still, application volume remains down 12% compared with the same time last year.
Demand for refinancing also inched higher last week, rising 2% from the previous week, according to the MBA’s survey. Compared with the same time last year, refinance applications are up 7%.
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Meanwhile, the Labor Department reported earlier this week that the consumer price index was unchanged in October from the previous month, with prices climbing 3.2% on an annual basis.
National Association of Realtors chief economist Lawrence Yun issued a statement predicting mortgage rates would continue to decline.
“Mortgage rates are plunging with the news of inflation calming,” Yun said.
“The interest rate rises should be over, and the Fed will have to consider cutting interest rates seriously,” he added. “In the meantime, the bond market is reacting as if the Fed will be cutting interest rates next year. Mortgage rates look to head towards 7% in a few months and into the 6% range by the spring of 2024.”
FOX Business’ Megan Henney contributed to this report.