The average rate for a 30-year fixed mortgage fell for a third straight week to 6.49%, according to data released Thursday by mortgage giant Freddie Mac.
That represented a slight decrease from 6.58% last week and a more than half-point drop from a peak of 7.08% on Nov. 10. Still, Long Islanders are facing significantly higher interest costs to purchase a home compared with last year, when the average was 3.11%
Thursday's average was the lowest since Sept. 22 when it stood at 6.29%.
Federal Reserve Chair Jerome Powell made comments Wednesday that raised the prospect of lower mortgage rates in future weeks. Powell said the Fed could begin to slow the pace of its interest rate hikes as soon as its Dec. 13-14 meeting.
Slower interest rate hikes would be welcome news for bond prices, which affect mortgage rates. Mortgage rates tend to move in tandem with the yield on 10-year U.S. Treasury notes, and the yield fell by three-eighths of a percentage point in November. When bond prices rise, yields fall. The November drop was the largest one-month decline since March 2020, according to The Wall Street Journal.
“Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Higher mortgage rates this year have led to a drop in transactions. There were 26% fewer Long Island home sales that closed in October than during the same month a year ago, according to OneKey MLS. Local home prices have started to level off, and more sellers are cutting their asking prices, but a meager number of homes on the market has kept homebuying competitive.
Kevin Dayton, vice president of mortgage lending at CrossCountry Mortgage in Garden City, said he’s seen an uptick in activity since rates began receding a few weeks ago.
This week, the company has been able to offer borrowers fixed-rate mortgages with rates in the 5.75% to 6% range, which is an improvement from about 7% in early November, he said. Dayton, who started working in the industry in 2003, said he would advise borrowers to act quickly when they’re ready to buy because of the risk that new economic data could send rates higher again.
“There really isn’t a precedent for this in my tenure of rates moving this much and being so volatile” he said.