The central bank has now been in a holding pattern since its last rate hike on July 26. Higher interest rates increase the cost of borrowing money for both banks and consumers and have an indirect influence on mortgage rates. Mortgage rates started to climb two years ago, as inflation surged and the Fed had to step in to tame it by hiking its key short-term interest rate, the federal funds rate. Read more: What Lower Mortgage Rates Mean for the Holiday Homebuying Season Today’s mortgage interest rate trends If you’re looking to buy a home, make sure to compare loan offers from multiple lenders and choose the best rate and term for you. They also vary widely by loan type and lender. Mortgage rates are determined by various economic conditions as well as specific factors like your credit score. The average rate for a 30-year fixed mortgage was 7.21% last week, compared to its peak at 8.09% in October, according to CNET’s sister site Bankrate. “The combination of home prices and still-high rates means affordability remains historically low despite improvement from recent peaks,” Matt Graham, of Mortgage News Daily, told CNET. While this signals a positive direction for the housing market, home loans are significantly more expensive than they were during the pandemic. 12 to 13 meeting, the Fed decided to hold interest rates steady for a third consecutive time. The recent drop in mortgage rates is due to falling inflation and other economic indicators, as well as messaging from the Federal Reserve that interest rate cuts are coming in 2024. Since early November, mortgage rates have been slowly inching lower.
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