US mortgage rates fall for a second week, a two-month low

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(Bloomberg) — US mortgage rates fell sharply for a second week, reaching a two-month low and providing some traction for the beleaguered housing market.

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The contract rate on a 30-year fixed mortgage fell 23 basis points to 6.67% in the week ending Nov. 18, according to Mortgage Bankers Association data released Wednesday.

Interest rates have fallen nearly half a percentage point in the past two weeks, the most since 2008 as recession concerns mount, inflation shows signs of cooling and some Federal Reserve officials say it may soon be appropriate to to slow the pace of monetary tightening.

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Freddie Mac data on Wednesday also pointed to a decline in borrowing costs, with interest on a 30-year fixed mortgage averaging 6.58% as of Nov. 23, down from 6.61% last week.

“In recent weeks, interest rates have risen above 7% before falling by almost half a percentage point,” said Sam Khater, chief economist at Freddie Mac. “This volatility makes it difficult for potential homebuyers to know when to hit the market.”

The fall in borrowing costs helped fuel demand as the MBA index of applications to buy a home rose 2.8%. That was the third rise in a row since the gauge fell to its weakest level since 2015. Data on new home sales also pointed to an increase in activity, with that measure unexpectedly rising in October, government data showed Wednesday.

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Picking up demand allowed MBA’s total measure of mortgage applications, including refinancing, to rise for a second week, but it still remains low. The index of refinancing activity rose from a 22-year low.

The housing market has been plagued this year by a rapid rise in mortgage interest rates. Minutes from the Fed’s meeting earlier this month could provide clues about the pace of upcoming rate hikes and how high borrowing costs will ultimately be when released later on Wednesday.

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Conducted weekly since 1990, the MBA survey uses responses from mortgage bankers, commercial banks and depositors. The data covers more than 75% of all residential mortgage applications in the US.

(Updates with Freddie Mac data from the fourth paragraph.)

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