For the first time since August the 30-year fixed rate mortgage has dropped below 7 percent. However, low inventory continues to keep home prices high. Considering that the Federal Reserve is expend to lower the federal funds target rate next year, there is likely to be a gradual thawing of the housing market next year, according to Freddie Mac’s report yesterday.
The 30-year fixed rate mortgage average now stands at 6.95 percent while a month ago it was 7.12 percent, according to Freddie Mac.
The Mortgage Bankers Association reported Wednesday that mortgage applications have increased for six weeks straight as mortgage rates continued to lower. However, purchase volume remained 18 percent lower than a year ago. Many homeowners who are locked in at much lower rates are deciding to remain in their homes rather than sell, which contributes to the low inventory. According to Realtor.com, some two-thirds of the outstanding mortgages have rates below 4 percent.