Millennials got cheaper mortgages than their parents

Millennials got cheaper mortgages than their parents, per Bloomberg.

The 30 year mortgage has fallen to 6.61%, going down for the ninth straight week and are at their lowest level since May, per Reuters.


For the ninth consecutive week, the average long-term U.S. mortgage rate has declined, reaching its lowest point since May.

Freddie Mac reported on Thursday that the average rate on a 30-year mortgage decreased to 6.61% from 6.67% the previous week. A year ago, the rate stood at 6.42%.

Borrowing costs for 15-year fixed-rate mortgages, commonly favored by homeowners refinancing their loans, also experienced a slight dip this week. The average rate fell to 5.93% from 5.95% last week, compared to 5.68% a year ago, according to Freddie Mac.

As we approach the new year, the economy continues to exhibit strength with solid growth, a tight labor market, decelerating inflation, and a budding recovery in the housing market, as noted by Sam Khater, Freddie Mac's chief economist.

Mortgage rates have been on a downward trend since late October when the average rate for a 30-year home loan reached 7.79%, marking the highest level since late 2000. This decline mirrors the trajectory of the 10-year Treasury yield, a key factor in loan pricing. The yield, which spiked in mid-October to its highest level since 2007, has been decreasing, reflecting optimism that inflation has subsided enough for the Federal Reserve to contemplate cutting interest rates after a substantial increase since March 2022.

The Fed, in its recent meetings, chose to maintain rates unchanged, providing a boost to financial markets. Investor expectations regarding future inflation, global demand for U.S. Treasurys, and the Fed's actions with its benchmark federal funds rate can influence home loan rates.

While the surge in mortgage rates from early last year has elevated borrowing costs, limiting the affordability for potential homebuyers amid rising home prices, the recent decline may provide some relief. However, despite the decrease, the average rate on a 30-year home loan remains significantly higher than two years ago when it was 3.11%. This substantial gap has contributed to the limited inventory of homes for sale, as homeowners who secured low rates two years ago are discouraged from selling.

Some housing economists are optimistic about increased home sales in the coming year, anticipating further easing of mortgage rates.

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