Mortgage rates in the U.S. reversed course after two weeks of increases.
The average for a 30-year, fixed loan was 6.33%, down from 6.48% last week, Freddie Mac said in a statement Thursday. It was the biggest drop since early December.
The housing market slowed drastically last year as borrowing costs surged, sidelining many would-be buyers. In recent months, mortgage rates have been volatile but have remained above 6%, a "seesaw trajectory" that will likely continue in the short term, according to Realtor.com.
"While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates," Sam Khater, Freddie Mac's chief economist, said in the statement. "Over the last few weeks, latent demand has been on display with buyers jumping in and out of the market as rates move."
The Federal Reserve has been on an almost yearlong campaign to curb inflation by hiking its benchmark rate. Data released Thursday showed that inflation slowed in December, adding to signs that prices have peaked and sending yields on the 10-year Treasury falling.
Despite the week's dip in borrowing costs, buyers are facing a much more expensive market than a year ago. At the current 30-year average, a borrower with a $600,000 mortgage would pay roughly $3,726 a month, about $1,048 more than a year ago, when rates were 3.45%.
