Yet again mortgage rates have fallen on a weekly basis, providing people with another chance to lock in low financing costs.
The 30-year fixed-rate mortgage averaged 3.66% for the week ending Nov. 21, down nine basis points from the previous week, Freddie Mac FMCC, -1.43% reported Thursday.
The 15-year fixed-rate mortgage dropped five basis points to an average of 3.15%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.39%, down five basis points from a week ago.
Mortgage rates roughly track the direction of the 10-year Treasury note TMUBMUSD10Y, -0.58% the yield on which has fallen slightly over the past week.
“The housing market continues to steadily gain momentum with rising home-buyer demand and increased construction due to the strong job market, ebullient market sentiment and low mortgage rates,” said Sam Khater, Freddie Mac’s Chief Economist, adding that he expects the housing market to support broader economic growth across the U.S. next year.
From an affordability perspective, though, low mortgage rates are something of a double-edged sword for home buyers. Yes, on the surface, they reduce the overall cost of purchasing a home.
However, low interest rates have brought more buyers into the real-estate market. As a result, the number of homes for sale has shrunk — in October, the inventory of homes for sale fell to 3.9 months from 4.3 months a year earlier. A 6-month supply of homes is generally indicative of a balanced market.
With so few homes for sale, prices have gone up by more than 6% over the past year. While this scenario has enticed home builders to increase construction of new homes, it will be a while before those properties enter the market. As a result, buyers who are struggling to afford a home purchase may not see a whole lot of relief thanks to low mortgage rates once all is said and done.