US Housing Prone For a Freefall Despite Mortgage Rates Declining Back From 20 Years Highs

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Bear Market
Bear Market

The Federal Reserve’s latest jumbo interest rate hike will weigh down on the US housing market even further, Freddie Mac’s chief economist has warned, even as mortgage rates decline back from their highest level in 20 years.

The 30-year fixed mortgage rate averaged 6.95% as of Thursday, a weekly update from Freddie Mac showed. The rate hit 7.08% the week before, blasting above 7% for the first time in two decades.

But Sam Khater, the mortgage giant’s chief economist, was downbeat on the prospects for the housing market after the Fed brought in its fourth consecutive 75 basis point hike on Wednesday. 

“Mortgage rates continue to hover around seven percent, as the dynamics of a once-hot housing market have faded considerably,” Khater said.

“Unsure buyers navigating an unpredictable landscape keeps demand declining, while other potential buyers remain sidelined from an affordability standpoint,” he added.

“Yesterday’s interest rate hike by the Federal Reserve will certainly inject additional lead into the heels of the housing market.”