Mortgage rates dropped this week in the wake of several bank failures, reversing course after rising half a percentage point over the past month. But longer-term uncertainty is expected to hamper many homebuyers and keep the cost of buying unaffordable for many.
The 30-year fixed-rate mortgage averaged 6.60% in the week ending March 16, down from 6.73% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 4.16%.
After hitting a 2022 high of 7.08% in November, rates had been trending down. However, they started climbing again in February, rising half a percentage point over the past month. Robust economic data suggested the Federal Reserve is not done in its battle to cool the US economy and will likely continue hiking its benchmark lending rate.
But that was before several banks collapsed over the past week. This led investors to flock to the safe haven of Treasury bonds, which pushed yields down and mortgage rates have followed.
"Turbulence in the financial markets is putting significant downward pressure on rates, which should benefit borrowers in the short term," said Sam Khater, Freddie Mac's chief economist.