Mortgage rates post their biggest weekly fall since 2008, providing minor relief to buyers, Freddie Mac says

• US mortgage rates have posted their biggest one-week drop in 14 years, Freddie Mac said.
• The average rate on 30-year fixed loan fell to 5.3% on Thursday, from 5.7% last week.

US mortgage rates posted it's largest one-week drop since 2008, Freddie Mac recently reported.

The average rate on the 30-year fixed rate mortgage plunged to 5.30% on Thursday, down from 5.70% the week prior. It's on course for its biggest weekly drop since late 2008. A year ago, the average 30-year rate stood at 2.90%.

"While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown," Freddie Mac economist Sam Khater said in a blog post.

Mortgage rates are likely to drop further as investors find safety in assets like US Treasuries. Mortgage rates are closely tied to yields on the benchmark 10-year US Treasury note, which fell below 3% on Friday as risks of the US economy falling into a recession rise. Bond prices and yields move inversely to each other, so when demand for the asset goes up, the yield falls.

The relatively lower borrowing costs reverses rising mortgage rates and rapid growth in US house prices over the past months as central banks become aggressive in its monetary policy to tame inflation. It's consequently dampened prospects for potential homebuyers as they also battle with soaring inflation that continues to sting the economy.

But even with the almost-half point drop this week, 30-year mortgage rates are still not far from late June's 14-year high of 5.81%.

In a recent National Housing Survey conducted by the Federal National Mortgage Association, homebuyers expressed they are heavily feeling the pinch, with 80% of consumers saying it is never been a worse time to buy a home in the current environment.

The prior jump in mortgage rates and home prices even prompted one economist to consider that mortgage applications are in a "meltdown."

With further interest rate hikes by the Federal Reserve around the corner however, homebuyer sentiment is likely to remain depressed even as mortgage rates are on the decline.

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