Mortgage rates have taken a nosedive this week following a better-than-expected monthly inflation reading. Nonetheless, elevated home prices, depressed buyer demand and low builder confidence indicate the housing market has a ways to go before it finds balance.
The average 30-year, fixed-rate mortgage plummeted to 6.61% for the week ending November 17, from 7.08% last week, according to Freddie Mac. Even after the whopping 47-basis-point drop (a basis point is one-hundredth of a percentage point) from a week ago, the typical rate is still more than double the 3.22% average from early January.
The 15-year, fixed-rate mortgage averaged 5.98% this week, down from 6.38% last week but up from 2.39% a year ago.
The average 5/1 adjustable-rate mortgage (ARM) was at 5.73%, down from 5.87% last week, according to the Mortgage Bankers Association (MBA). As borrowing costs have remained high, ARMs have been more attractive, since they have a lower initial rate than fixed-rate mortgages. But the rate on a 5/1 ARM can “adjust” higher—or lower—after the first five years.
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