The average interest rate on the most popular U.S. home loan saw its largest single-week decline since July, dropping back to just below 7%, as signs inflation has passed its peak sent Treasury yields lower, data from the Mortgage Bankers Association (MBA) showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage dropped by 24 basis points to 6.90% for the week ended Nov. 11 as financial markets took encouragement from data last week that indicated high inflation was slowing, which would allow the Federal Reserve to scale back its hefty interest rate hikes.
The yield on the 10-year note acts as a benchmark for mortgage rates.
Despite the good news, mortgage rates are still more than double what they were at the beginning of the year and the U.S. central bank’s swift increases in its benchmark overnight lending rate has weighed heavily on the housing sector.
The MBA’s Market Composite Index, a measure of mortgage loan application volume, rose 2.7% from a week earlier.
The central bank is expected to slow its pace of rate hikes to a half percentage point increase when it next meets on Dec. 13-14 after lifting its policy rate by 75 basis points for the past four meetings, as it allows time for the economy to absorb the fastest pace of tightening of monetary policy in 40 years.