Freddie Mac: Weekly mortgage rates show biggest drop since 1981

Nov. 17 (UPI) -- A report from Freddie Mac on Thursday suggests some stability is returning to the housing market as the weekly average mortgage rate declined sharply this week.

The financial institution's Primary Mortgage Market Survey showed the average 30-year fixed mortgage rate drop from 7.08% to 6.61% for the week ending Thursday. The average 15-year fixed mortgage rate dropped to 5.98% from 6.38%.

The dip in rates is a favorable sign for potential homebuyers in particular, but rates are still far from where they were at this time last year. The 30-year rate at this time in 2021 was 3.10% and the 15-year rate was 2.39%.

"Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked," said Sam Khater, Freddie Mac's chief economist. "While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market. Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact."

Average rates for the week ending Nov. 10 were the highest of the year. The rate drop is the largest Freddie Mac has recorded since 1981. But it is not the first time this year that rates looked like they were on the decline.

In June, the 30-year rate reached 5.81% before steadily dropping to 5.30% for the first week of July. It would bounce up to 5.51% the following week. August was similarly back and forth before climbing to where it is now.

The data Khater referred to are the most recent Consumer Price Index and personal consumption expenditures reports. The CPI indicated that inflation rose by a smaller margin than expected in October. The PCE showed wages and spending on the rise. Both reports keep the pulse of inflation and the health of the economy for institutions such as the Federal Reserve.