Treasury yields sank for a second week, pushing mortgage rates down in their largest single-week decline since last November.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.5%, down a full quarter point from 7.76%. A year ago at this time, the 30-year FRM averaged 7.08%.
The 15-year fixed rate fell from 7.03% to 6.81%. A year ago, it averaged 6.38%.
But while this is undoubtedly good news for homebuyers, market headwinds continue to depress demand.
“Incoming data show that household debt continues to rise, primarily due to mortgage, credit card, and student loan balances,” said Sam Khater, Freddie Mac’s Chief Economist. “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”
Americans have been terrified that the return of student loan payments will significantly worsen their finances. More than 60% of respondents to a survey expect their monthly payments to be less than $250 per month, but 13% say they will owe $500 or more.
New payments at those levels will likely strain borrowers struggling in the high-inflation, high-rate environment.
Many Americans have already delayed big changes because of their student loan debt. Nearly one quarter (23%) said they can’t buy a home thanks to their payments.
At the same time, home prices are still spiking thanks to an imbalance between inventory and demand. NAR reported that single-family existing home sales prices rose in 82% of metros in Q3, up from 58% in the previous quarter.
The monthly mortgage payment on a typical, existing single-family home with a 20% down payment was $2,192, a 19.2% increase YOY.
Still, many buyers don’t have the option to wait out rising home prices. One in ten sellers are moving, in part, because of return-to-office mandates, forcing them to either move despite the difficult market or lose their jobs. These borrowers and others buying on a timeline may save hundreds of dollars a month by locking in a rate now.