The decline in home borrowing rates in recent weeks has been a spur to prospective homebuyers, reflected in a spike in applications for mortgages.
The recent easing of rates has come amid steep declines in the stock market and tumbling interest rates on the 10-year U.S. Treasury note — which influences long-term mortgage rates. The decline in rates could help boost home sales, which stumbled last year as higher borrowing costs eroded affordability.
The head of the Federal Reserve last week signaled restraint and flexibility on setting interest rates, reassuring investors who had been sending stock prices lower out of fears that the Fed would tighten credit too much, possibly sending the economy into a recession.
Mortgage applications jumped 13.5 percent in the week ended Jan. 11 from a week earlier, reaching their highest level since February 2018, according to the Mortgage Bankers Association.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.