Fall in average long-term mortgage rates in the United States; 30 years at 2.98% | Economic news

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WASHINGTON (AP) – Average long-term mortgage rates in the United States fell this week, as the 30-year key rate fell below 3% again.

Mortgage buyer Freddie Mac reported on Wednesday that the average benchmark home loan rate fell to 2.98% from 3.09% last week. Around the same time last year, the rate was 2.84%.

The rate on a 15-year loan, a popular option for homeowners refinancing their mortgages, fell to 2.27% from 2.35% last week.

Rates remain historically low, although limited inventory and rising prices leave many potential buyers on the sidelines.

Economists at Freddie Mac attributed the latest mortgage rate cut to a recent price rally in the treasury bill market, which saw major treasury bond yields fall to their lowest level since July. Long-term bond yields, which can influence mortgage and other consumer loan rates, generally fall when bond prices rise.

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Last week, the Federal Reserve announced that it would keep its main borrowing rate close to zero, but would start cutting back the extraordinary stimulus it has provided since the coronavirus pandemic erupted last year. The Fed said it would start cutting its $ 120 billion monthly bond purchases in the coming weeks, from $ 15 billion per month, citing an improving economy and growing concern about the persistence of a peak in inflation.

The central bank’s action comes as higher prices for just about everything – food, rent, heating oil, cars and other necessities – weighed on households. Strong consumer demand has fueled the price spike, which has been hit by persistent supply shortages due to COVID-related plant closures in China, Vietnam and other foreign manufacturers.

Soaring inflation for basic necessities is preparing many Americans for a financially tough Thanksgiving and holiday shopping season. The government reported Wednesday that prices for American consumers jumped 6.2% in October from a year earlier, leaving families facing the highest rate of inflation since 1990. From September to October, prices jumped 0.9%.

Inflation is eroding the steep wage and salary increases that have been paid to American workers in recent months, posing a political threat to the Biden administration and Congressional Democrats and stepping up pressure on the Fed as it reflects on the speed at which to withdraw efforts to stimulate the economy. .

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