The average rate on a 30-year fixed mortgage decreased to 6.57% on Monday, down from 6.76% on Friday due to the fall in the yield on the 10-year Treasury, according to Mortgage News Daily.
The average rate on a 30-year fixed mortgage fell to 6.57% on Monday from 6.76% on Friday, according to Mortgage News Daily. The drop is due to the fall in the yield on the 10-year Treasury, which hit a one-month low after Silicon Valley Bank and Signature Bank failed. However, the monthly payment for a $500,000 home with a 20% down payment on a 30-year fixed mortgage is still higher than it was in January, despite being $128 less than last week. The impact of the mini banking crisis on rates will depend on changes in consumer behavior, as the housing market remains heavily influenced by inflation.
According to Mortgage News Daily, the average rate on a 30-year fixed mortgage decreased to 6.57% on Monday, down from 6.76% on Friday and a recent high of 7.05% last Wednesday. This drop in rates is attributed to the fall in the yield on the 10-year Treasury, which hit a one-month low following the failures of Silicon Valley Bank and Signature Bank and the ensuing impact on the banking sector.
For a buyer 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 last week, but still higher than it was in January. In October, rates surged over 7%, causing a slowdown in home sales. However, rates started falling in December and were near 6% by the end of January, resulting in an 8% monthly jump in pending home sales and higher-than-expected sales of newly built homes.
While the numbers for February are not yet available, agents and builders have said sales took a big step back in February as rates shot higher. If rates continue to drop now, buyers could return once again.
Matthew Graham, chief operating officer at Mortgage News Daily, believes that this mini banking crisis needs to drive a change in consumer behavior in order to have a lasting positive impact on rates. He notes that it's still all about inflation, and markets now have to contend with the inflationary impact of consumer fear. Tuesday brings a fresh consumer price index report, which is a monthly measure of inflation in the economy.
Federal Reserve Chairman Jerome Powell recently stated that if the latest economic data were to indicate that faster tightening is warranted, they would be prepared to increase the pace of rate hikes. While mortgage rates don't follow the federal funds rate exactly, they are heavily influenced by both the Fed's monetary policy and its thinking on the future of inflation.
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