Average U.S. long-term mortgage rate dropped down last week

Associated Press

The average long-term mortgage rate in the U.S. ticked back down last week following several weeks of increases.

Mortgage buyer Freddie Mac reported Thursday that the average rate for a 30-year mortgage fell to 3.09% from 3.14% the week before. Last year at this time the long-term rate stood at 2.78%.The rate for a 15-year loan, a popular option for homeowners refinancing their mortgages, fell to 2.35% from 2.37% the week prior.

Rates remain historically low, though limited inventory and rising prices are leaving many potential homebuyers on the sidelines.

Last week, the government reported that the median price of a new home increased to a record $408,800 in September, up 9.5% from a year ago. The median price for an existing home jumped to $352,800, a 13.3% increase from September last year, according to the National Association of Realtors.

“While mortgage rates fell after several weeks on the rise, we expect future upticks due to stronger economic data and as the Federal Reserve pulls back on its stimulus,” said Sam Khater, Freddie Mac’s chief economist.

As expected on Wednesday, the Federal Reserve announced that it would keep its main borrowing rate near zero but begin dialing back the extraordinary stimulus it’s provided since the pandemic erupted last year. The Fed said it will start reducing its $120 billion in monthly bond purchases in the coming weeks, by $15 billion a month, citing an improving economy and escalating concern that high inflation now seems likely to persist.

The Fed’s announcement came as higher prices for just about everything – food, rent, heating oil, autos and other necessities – have burdened households.