Mortgage rates fall for sixth straight week to 6.27%
A sign near two homes that recently sold in North Patchogue this week. Credit: Newsday/Steve Pfost
The average U.S. mortgage rate fell for a sixth straight week to 6.27%, which was the lowest it has been since mid-September, according to mortgage giant Freddie Mac.
Last week, the average rate for a 30-year fixed home loan was 6.31%. The drop in rates is a respite for would-be Long Island homebuyers who had their financing costs climb steadily from August to early November, when the average peaked at 7.08%, its highest level in two decades.
Still, buyers are worse off this year. The average mortgage rate has more than doubled, up from 3.05% around this time in 2021. That has translated into monthly mortgage payments that cost hundreds more than they would have a year ago for some buyers. Other entry-level buyers no longer qualify for a mortgage.
“Heading into the holidays, mortgage rates continued to move down,” Sam Khater, Freddie Mac’s chief economist said in a statement. “Rates have declined significantly over the past six weeks, which is helpful for potential homebuyers, but new data indicates homeowners are hesitant to list their homes.”
More than two-thirds of homeowners have a fixed mortgage rate below 4%, according to Freddie Mac.
There have been fewer people seeking mortgages to purchase a home lately, said Steve Probst, branch manager at Fairway Independent Mortgage Corp. in Hauppauge. He said he’s optimistic that as rates stabilize, there will be pent-up demand for home purchases next summer.
“It’s definitely slower than it has been in a very long time, and it’s not just me. It’s the entire industry on Long Island,” Probst said. “Typically, there’s still people out shopping [for a home] even though it’s just a few days before Christmas. Last year, at this time it was very busy.”
A lack of listings has kept homebuying competitive on Long Island even as the number of transactions has dropped significantly. Prices have continued to increase but more slowly than last year.
There were 31% fewer home sales that went into contract in November than in the previous year, according to data released last week by OneKey MLS. But fewer buyers hasn’t led a glut of homes to languish on the market because there aren’t enough new listings.
The number of homes on the market on Long Island at the end of November — 6,020 — was still about half of the total from November 2019 before the pandemic started.
The median home price last month increased 2.5% to $668,000 in Nassau County compared with the previous year. In Suffolk, the median increased 4.8% to $545,000, according to OneKey MLS.
Mortgage rates responded positively to a slower annual pace of inflation in November. The Federal Reserve has also started raising its benchmark interest rate more slowly. It increased the rate by a half-point in December after raising it by three-quarters of a point in each of four consecutive meetings. Mortgage rates tend to move in the same direction as the yield on 10-year U.S. Treasury notes, which surged this year as the pace of inflation hit a 40-year high.
Slower growth in consumer prices would boost homebuying, Nadia Evangelou, senior economist at the National Association of Realtors, wrote in commentary published online Thursday.
“Unless inflation surprises with an upswing, mortgage rates will move closer to 6% at the beginning of next year, bringing more buyers back to the market,” she said.
Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.
