US mortgage rates retreated sharply for a second week, hitting a two-month low and providing a bit of traction for the beleaguered housing market.
The contract rate on a 30-year fixed mortgage decreased 23 basis points to 6.67% in the week ended Nov. 18, according to Mortgage Bankers Association data released Wednesday. The results reflect a change in Freddie Mac’s methodology that the company says will provide a broader, more accurate view of the mortgage market. Starting last week, instead of surveying lenders, it now uses data collected by its automated underwriting system to calculate average rates.
Rates have plunged nearly a half percentage point in the past two weeks, the most since 2008, as recession concerns mount, inflation shows signs of cooling and a number of Federal Reserve officials say it may soon be appropriate to slow the pace of monetary tightening.
The slide in borrowing costs helped stir demand as the group’s index of applications to buy a home climbed 2.8%. That marked the third-straight increase since the gauge stumbled to the weakest level since 2015.
The pickup in demand allowed the overall measure of mortgage applications, which includes refinancing, to rise for a second week, but it still remains depressed. The index of refinancing activity edged up from a 22-year low.
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The housing market has been pummeled this year by a rapid rise in mortgage rates. Minutes of the Fed’s meeting earlier this month may offer clues about the pace of upcoming interest-rate hikes and how high borrowing costs will ultimately go when released later Wednesday.
Other data on Wednesday include the latest mortgage rates as measured by Freddie Mac as well as new-home sales, which are forecast to have dropped in October.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.