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By Matt Ott<\/div><\/div>\n

Last week, a 30-year, fixed-rate loan averaged 7.08%; this week it dropped almost half a percentage point to 6.61% as signs suggest inflation may have peaked.<\/span><\/span><\/p>\n<\/div>\n

WASHINGTON (AP) \u2013 The average long-term U.S. mortgage rate tumbled by nearly a half-point this week, but will likely remain a significant barrier for potential homebuyers as Federal Reserve officials have all but promised more rate hikes in the coming months.<\/span><\/span><\/p>\n

Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate fell to 6.61% from 7.08% last week. A year ago the average rate was 3.1%.<\/span><\/span><\/p>\n

The rate for a 15-year mortgage, popular with those refinancing their homes, fell to 5.98% from 6.38% last week. It was 2.39% one year ago.<\/span><\/span><\/p>\n

Two weeks ago, the Fed raised its short-term lending rate by another 0.75 percentage points, three times its usual margin, for a fourth time this year as part of its inflation-fighting strategy. Its key rate now stands in a range of 3.75% to 4%.<\/span><\/span><\/p>\n

There had been some hope that the Fed would begin to dial the rate increases down as more evidence comes in that prices may have peaked. However, recent comments by Fed officials have turned down that optimism.<\/span><\/span><\/p>\n

James Bullard, who leads the Federal Reserve Bank of St. Louis, said Thursday that the Fed may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control.<\/span><\/span><\/p>\n

The Fed\u2019s next two-day rate policy meeting wraps up on Dec. 14.<\/span><\/span><\/p>\n

The Labor Department reported last week that consumer inflation reached 7.7% in October from a year earlier, the smallest year-over-year rise since January. Excluding volatile food and energy prices, \u201ccore\u201d inflation rose 6.3% in the past 12 months. On Wednesday, Labor reported that prices at the wholesale level fell for the fourth straight month.<\/span><\/span><\/p>\n

Those figures were all lower than economists had expected, but it remains to be seen whether it\u2019s enough to get the Fed to ease off the jumbo rate hikes.<\/span><\/span><\/p>\n

Three weeks ago, the average long-term U.S. mortgage rate topped 7% for the first time in more than two decades, which combined with sky-high home prices, have crushed homebuyers\u2019 purchasing power by adding hundreds of dollars to monthly mortgage payments.<\/span><\/span><\/p>\n

Sales of existing homes have declined for eight straight months as borrowing costs have become too big of an obstacle for many Americans already paying more for food, gas and other necessities. On top of that, homeowners seeking to upgrade or change locations have held off listing their homes because they don\u2019t want to jump into a higher rate on their next mortgage.<\/span><\/span><\/p>\n

The sagging housing market has prompted real estate companies to dial back their financial outlooks and shrink their workforces. Online real estate broker Redfin is letting go of 862 employees and shutting down its instant-cash-offer subsidiary RedfinNow. Redfin also laid off 470 employees in June, blaming slowing home sales. Through attrition and layoffs, Redfin has slashed more than a quarter of its workforce on the assumption that the housing downturn will last \u201cat least through 2023,\u201d it said in a regulatory filing.<\/span><\/span><\/p>\n

Another online real estate broker, Compass, has laid off hundreds of workers this year.<\/span><\/span><\/p>\n

While mortgage rates don\u2019t necessarily mirror the Fed\u2019s rate increases, they tend to track the yield on the 10-year Treasury note. The yield is influenced by a variety of factors, including investors\u2019 expectations for future inflation and global demand for U.S. Treasurys.<\/span><\/span><\/p>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"