By Amina Niasse
NEW YORK (Reuters) -U.S. mortgage rates fell for the third-straight week this week to the lowest since late September, signaling falling yields in the Treasury market that largely determine home borrowing costs may be boosting housing market affordability.
The average rate on 30-year fixed-rate mortgages dipped to 7.44% from 7.50% the week before, according to a Freddie Mac survey released on Thursday. The softening comes after rates reached a 23-year high of 7.79% three weeks ago. That is still notably higher than the 6.61% at this time last year.
Mortgage rates began rising last year as the Federal Reserve tightened interest rates in a bid to ward off inflation. Rates on home loans eventually climbed to their highest levels in more than two decades as 10-year Treasury yields, used by most U.S. lenders as a benchmark for home loans, hit their highest since 2007 last month.
Now, some economists expect mortgage rates to keep falling as the spread between 10-year Treasury yields and 30-year mortgage rates narrows.
Yields on plunged below 4.50% this week after readings of inflation came in lower than expected, adding to investors’ convictions that the Fed is done raising interest rates. Earlier this month the Fed held off on raising its policy benchmark borrowing rate for a second straight meeting, leaving it in the current range of 5.25%-5.50%.
The downdraft in bond yields and mortgage rates could improve housing affordability. The national median mortgage payment for a new mortgage edged down by $15 in September from the month prior’s $2,170, according to the Mortgage Bankers Association.