Average mortgage rate falls for first time since September

The average 30-year fixed mortgage rate dipped slightly to 7.76% this week, falling for the first time since early September, according to mortgage giant Freddie Mac’s weekly report.

The average fell from 7.79% last week. It is still nearly a full point higher than the average at this time last year of 6.95%. Two years ago, the average was 3.09%.

On Wednesday, the Federal Reserve said it would maintain its benchmark interest rate at its highest level since 2001 with the goal of lowering inflation toward its 2% target.

"The Federal Reserve again decided not to raise interest rates but have not ruled out a hike before year-end,” said Freddie Mac chief economist Sam Khater. “Coupled with geopolitical uncertainty, this ambiguity around monetary policy will likely have an impact on the overall economic landscape and may continue to stall improvements in the housing market.”

With rates moving toward 8% this fall, Long Island homebuyers have seen their monthly payments increase by hundreds of dollars a month. At the same time, the cost of a house has kept rising this year, hitting record levels of $735,000 in Nassau County and $595,000 in Suffolk County in September.

John P. Bernardes, vice president of mortgage lending at Guaranteed Rate in Farmingdale, said he’s still seeing potential homebuyers come in to get preapproved for loans but “things have slowed down a bit.”

The fall upswing in rates comes just as Long Island’s home sales market tends to recede around Thanksgiving. Mortgage rates rose similarly last fall, and then the number of closings plummeted by January.

“It’s too early to say it’s a holiday season slowdown, so I think the rates over the past couple of weeks and getting to that 8% number has people a little scared, a little put off,” he said. 

While the average reported by Freddie Mac has stayed below 8%, some borrowers, depending on their financial profiles, have seen rates at that level. 

This year, Bernardes said he hopes that homebuyers who have been thwarted because there have been too few houses on the market will keep their search going during the winter months.

“With the shortage of inventory, there’s so many people looking that they might not slow down,” he said. “They just have to get used to the new normal of 8%.”

There have been signs in the past few days that mortgage rates could head lower. Mortgage News Daily, which publishes a separate daily index measuring lenders’ rates, said its average 30-year fixed rate was 7.51% on Thursday.

Freddie Mac’s report reflects information from lenders gathered over the week ending Nov. 2.

Last week's average rate was the highest since 2000 and demand for mortgages fell accordingly. The Mortgage Bankers Association said Wednesday that mortgage applications to purchase homes were at their lowest level since 1995, during the week ending Oct. 27, according to its latest data.

Bob Broeksmit, president and CEO of the Mortgage Bankers Association in Washington D.C., said he was pleased to see the Fed avoid raising its benchmark rate further this week and hopes it will not raise rates further this year.

“These actions would help to lower mortgage rates and improve homebuyer affordability heading into 2024,” he said in a statement.

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

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.