Though borrowing costs are rising again after a brief break, historical patterns indicate there may be some easing on the horizon.
Bouncing table tennis ball

© cagkansayin - iStock/Getty Images Plus

After a break in rising borrowing costs last week, the 30-year fixed-rate mortgage once again pushed ahead of 7% this week, forcing house hunters to recalculate what they can afford. Freddie Mac reports that the 30-year fixed-rate mortgage averaged 7.08% this week, up from last week’s 6.95% average. “The housing market is the most interest rate–sensitive segment of the economy, and the impact rates have on home buyers continues to evolve,” says Sam Khater, Freddie Mac’s chief economist. “Home sales have declined significantly, and as we approach year’s end, they are not expected to improve.”

However, historical patterns in mortgage rates indicate that some easing could come soon. Also, if the Federal Reserve takes a pause on future hikes to its benchmark rate, that could bode well for mortgage rates as well. “A return to a normal spread between the government borrowing rate and the home purchase borrowing rate will bring the 30-year mortgage rate down to around 6%,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “The usual spread between the 10-year Treasury yield and the 30-year mortgage rate is between 150 to 200 basis points, rather than the current spread of 300 basis points.”

The Mortgage Bankers Association has predicted even more relief on the horizon, projecting that the 30-year fixed-rate mortgage may fall to 5.4% by the end of 2023. Meanwhile, Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 10:

  • 30-year fixed-rate mortgages: averaged 7.08%, with an average 0.9 point, increasing from last week’s 6.95% average. Last year at this time, 30-year rates averaged 2.98%.
  • 15-year fixed-rate mortgages: averaged 6.38%, with an average 1 point, rising from last week’s 6.29% average. A year ago, 15-year rates averaged 2.27%.
  • 5-year hybrid adjustable-rate mortgages: averaged 6.06%, with an average 0.2 point, increasing from last week’s 5.95% average. A year ago, 5-year ARMs averaged 2.53%.
Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.