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Mortgage rates this week
Mortgage rates fell throughout November, with the average on a 30-year fixed-rate loan hitting its lowest point since August on the final day of the month.
The 30-year fixed-rate mortgage averaged 7.14% APR, down 12 basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.
The 15-year fixed-rate mortgage averaged 6.43% APR, down seven basis points from the previous week's average.
The 5-year adjustable-rate mortgage averaged 8.05% APR, down one basis point from the previous week's average.
Any form of relief from high interest rates is welcome with how dramatically unaffordable the U.S. housing market has become. Affordability doesn't mean merely that homes are expensive, though they are; it's a comparison of housing costs versus income.
The Federal Reserve Bank of Atlanta's Home Ownership Affordability Monitor (HOAM) tracks "the ability of a median-income household to absorb the estimated annual costs associated with owning a median-priced home." Its most recent report shows housing to be the least affordable it's been since 2006, the earliest data in the index. That update, released Nov. 13, covers up through September, when the monthly average interest rate was 7.3%; it doesn't yet reflect the effect of rates closing in on 8% in October.
Breaking down the components driving the change in affordability — incomes, home prices and interest rates — the past few months' plunge in affordability was due mainly to higher interest rates. The HOAM also includes property taxes, homeowners insurance and private mortgage insurance (the index assumes a 10% down payment), making it a pretty representative model of what home buyers face.
In that case, falling rates should improve the affordability outlook, right? Well, only if those other inputs hold steady. For example, if lower interest rates bring more buyers into the market and create competition, home prices could go up. Then it would be home prices putting the squeeze on affordability rather than rates. That was the case in 2021, when interest rates were ultra low but home prices were skyrocketing.
All of that said, what truly matters is what's affordable for you. If financially and life-stage-wise you're in a spot where you're ready to buy a home, then that's the right time to buy. Waiting for a certain interest rate or getting hung up on grim housing headlines in your newsfeed could mean missing out on a property that ticks all your boxes.
November mortgage rates forecast
When mortgage rates cross a 23-year-old threshold, it makes you wonder if they'll keep rising. They might. But the more likely scenario is that they’ll plateau for much of November, although they could succumb to upward pressure after Thanksgiving.
What other forecasters say
Three prominent organizations have predicted that mortgage rates will be higher in the final three months of this year than they were in the previous three months. And all three — Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors — predict that mortgage rates will reach their peak in the fourth quarter of this year and drop throughout 2024.
As recently as August, all three organizations were predicting that mortgage rates wouldn't even hit 7% this year. Instead, rates reached 8%. Treat this current forecast with skepticism, too.
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