Mortgage rates fall to lowest level in nearly 4 weeks
The average rate on a 30-year fixed mortgage is 6.69%, Mortgage News Daily said.
Mortgage rates have fallen to their lowest level in nearly four weeks as relief for oil prices and fresh inflation data ripple through financial markets, according to Mortgage News Daily (MND).
The average interest rate on a 30-year fixed mortgage stands at 6.69%, dropping from a rate as high as 6.83% in late July, MND data on Thursday showed.
Still, mortgage rates stand well above their level before the war. Prior to the Iran war in late February, a 30-year fixed mortgage clocked in at an average just below 6%.
The decline in mortgage rates over recent weeks has coincided with an ease in oil prices and Treasury yields, which closely track mortgage rates. The shift has partially reversed a trend that took hold after the Iran war broke out.
At that time, mortgage rates surged in response to a jump in U.S. Treasury yields, or the amount paid annually to a holder of government debt. The rise in bond yields owed to fear of a renewed bout of inflation as oil prices climbed.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks higher consumer prices that would eat away at those annual payouts. In turn, bonds often become less attractive in response to economic turmoil. When demand falls, bond yields rise
A pause in large-scale fighting in the Middle East softened upward pressure on oil costs, and favorable government data on prices lowered inflation expectations. In turn, mortgage rates fell.
Global oil prices fell as low as $78.11 a barrel last week, notching their cheapest price since early July, though an uptick in recent days pushed the measure above $87 a barrel on Friday morning.
Meanwhile, an inflation report this week showed consumers price increases eased slightly last month. A day later, another batch of government data showed that prices paid to wholesalers by producers of goods had been left unchanged in July, coming in lower than economists’ expected.
The pair of government reports “help the market more accurately measure the true impact of fuel prices,” Mortgage New Daily said.
In recent months, a double-whammy of increased prices and high mortgage rates has put homes out of reach for many buyers, some analysts previously told ABC News. Heightened economic uncertainty amid the Iran war has also paralyzed some buyers disenchanted by elevated consumer prices and a murky path forward for borrowing costs, they said.
Elevated mortgage rates have also contributed to a phenomenon known as the "lock in" effect.
Mortgage rates remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.
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