Mortgage rates fell to their lowest level since May

© Reuters. PHOTO: KB Home residential single-family homes are shown under construction in the Valley Center community, California, U.S. June 3, 2021. REUTERS/Mike Blake/File Photo

(Reuters) – The interest rate on the most common type of U.S. home loan fell for a ninth straight week this week and closed the year at its lowest level since May, according to data released by Freddie Mac on Thursday.

The 30-year fixed-rate mortgage rate averaged 6.61% as of Dec. 28, down from 6.67% a week earlier. The rate has fallen every week since hitting a 22-year high in late October, falling 1.18 percentage points over that period.

Rates, which fell below 3% during the height of the COVID-19 pandemic, have risen sharply starting in 2022, when the Federal Reserve began an aggressive rate hike campaign to curb inflation.

The Fed recently signaled that it is done raising rates and is likely to begin cutting them in 2024. Bond markets responded with a furious rally at the end of the year that drove yields on the 10-year Treasury note used to set mortgage rates. to less than 4% from around 5% at the end of October.