According to Mortgage News Daily, the average rate for a 30-year fixed mortgage dropped to 6.57% on Monday, down from Friday’s rate of 6.76% and a recent high of 7.05% on Wednesday. This decrease in mortgage rates is loosely tied to the dip in the 10-year Treasury yield, which fell to a one-month low after the failures of Silicon Valley Bank and Signature Bank, creating a ripple effect in the banking sector.
For prospective home buyers looking at a $500,000 home with a 20% down payment on a 30-year fixed mortgage, the monthly payment this week is $128 less than it was just last week. However, it is still higher than it was in January.
The sudden increase in mortgage rates in October 2022 led to a slowdown in home sales. But rates started to drop in December and were at nearly 6% by the end of January, which caused an 8% monthly jump in pending home sales, according to the National Association of Realtors. Sales of newly built homes also surged higher than expected. However, anecdotal evidence suggests that sales took a big step back in February as rates shot up, and it remains to be seen how they will fare in March.
Federal Reserve Chairman Jerome Powell has indicated that the latest economic data has been stronger than expected, and he suggested that the Fed could increase the pace of rate hikes if necessary.
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