Dec 14 (Reuters) – The average interest rate on the most popular U.S. home loan fell this week to below 7% for the first time since August as Treasury market yields dropped sharply after the Federal Reserve firmly signaled it is nearing cuts to its policy rate.
The average contract rate on a 30-year fixed-rate mortgage fell to 6.95% this week from 7.03% in the prior week, according to a Freddie Mac survey released on Thursday.
The yield on the 10-year Treasury note acts as a benchmark to set home loan costs. Borrowing costs for home purchases had reached two-decade highs near 8% in October.
Yields were already falling but tumbled further after the U.S. central bank left interest rates unchanged on Wednesday and Fed Chair Jerome Powell said its tightening cycle is likely over with discussions on cutting rates coming “into view” given inflation has been falling faster than expected.
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