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Mortgage rates have tumbled more than a third of a point over the past six weeks, retreating back to where they were in mid-April.
Our new survey of major lenders found the average cost for a 30-year fixed-rate loan – the most popular way to pay for a house – fell to 6.57% from 6.65% last week.
After steadily rising for two years, the cost of financing a home seems to have peaked at 6.93% in late June. Now we expect them to drop a little more over the next couple of weeks and then level out at around 6.5% by early fall.
While rates are still higher than they’ve been in four years, this is the best news anyone trying to buy or sell a house could have hoped for.
We’re still paying just one-and-a-quarter points more than during the summer of 2003, when rates reached record lows.
Home loans still cost less than they did throughout the mid- to late-‘90s, when 7% and 8% was the norm, and we’re no where near the double-digit rates of the ‘80s and early ‘90s.
The decline began right after the Federal Reserve Bank decided to make borrowing more expensive in late June. Many economists and investors thought that would be the end of the Fed's two-year campaign to push rates higher -- and they were right.
At 17 straight meetings, dating back to June 2004, Fed policymakers had sought to fight inflation by raising the interest rate it charges banks to borrow money.
When lenders pass that cost along to us by charginng more for mortgages, credit cards, home equity and auto loans, we're supposed to spend less, making it more difficult for everyone from furniture makers to hair stylists to raise prices.
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