Mortgage rates finally dropped last week after five weeks of continuously creeping up, but remain much higher than they were during this time last year, according to a primary mortgage market survey update by the Federal Home Loan Mortgage Corporation , better known as Freddie Mac.
While any drop could be a relief to homebuyers struggling with high mortgage rates, the rate remained higher than it was during this time last year, when it averaged 5.66 percent. The 15-year fixed-rate mortgage was also higher than last year's 4.98 percent, at an average of 6.55 percent. Low mortgage rates during the pandemic had contributed to an explosion in demand, which combined with low inventory led homebuyers to bidding wars that contributed to prices skyrocketing between 2020 and 2022. But when high prices met with higher mortgage rates last year, demand—and sales—started to decline, triggering a so-called"correction" of the housing market.
Where mortgage rates will go next—whether they'll further slide down or spike up again—will largely depend on the next move from the Federal Reserve, whose chair, Jerome Powell, recently signaled that the central bank might raise its key interest rate again as inflation remains too high.