SILVER SPRING, Md. >> The average long-term mortgage rate in the U.S. ticked back down this week following several weeks of increases.
Mortgage buyer Freddie Mac reported today that the average rate for a 30-year mortgage fell to 3.09% from 3.14% last week. 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% last week.
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 rose 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.
Also today, the government reported that the number of Americans applying for unemployment benefits fell to a pandemic low last week, another sign the job market is healing after last year’s coronavirus recession. Overall, 2.1 million Americans were collecting unemployment checks the week of Oct. 23 — down from 7.1 million a year earlier when the economy was still reeling from the coronavirus outbreak.
Last week, the government reported that the U.S. economy slowed sharply to a 2% annual growth rate in the July-September period, the weakest quarterly expansion since the recovery from the pandemic recession began last year. Rising COVID-19 cases and supply shortages were cited as factors hampering growth.