Mortgage rates in the US continued their decline, ending the year at the lowest level since May.

The average for a 30-year, fixed loan was 6.61 per cent, down from 6.67 per cent last week, Freddie Mac said in a statement on Thursday (Dec 28). 

Many industry-watchers are optimistic that the steady slide in borrowing costs – from a peak of 7.79 per cent in late October – will fuel fresh demand for home purchases in the coming months as the market’s busiest season gets underway.

Yet listings remain in short supply, prices are still out of reach for vast numbers of Americans, and 30-year mortgage rates are more than double where they started in 2022 – all suggesting a rebound may be slow and bumpy. 

A measure of contracts to buy previously owned homes held at a record low in November, the National Association of Realtors reported on Thursday.

The Federal Reserve has signalled its willingness to consider a cut to its benchmark rate in the new year if inflation cooperates. Mortgages should then follow, easing burdens for house hunters. 

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“The rapid descent of mortgage rates over the last two months stabilised a bit this week, but rates continue to trend down,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “Heading into the new year, the economy remains on firm ground with solid growth, a tight labour market, decelerating inflation, and a nascent rebound in the housing market.” BLOOMBERG