Home buyers rushed to lock in this week’s lower mortgage rates, with applications for home loans seeing their first increase in a month as the average for the 30-year fixed-rate mortgage dipped to 7.5%, according to Freddie Mac and the Mortgage Bankers Association. Purchase applications rose 3% for the week, although they are still 20% lower than the same week a year ago.

The slight reprieve for mortgage rates, which hovered near 8% in recent weeks, is welcome news after reaching 20-year highs. The 30-year fixed-rate mortgage dropped a quarter of a percent this week, the largest one-week decrease since last November, says Freddie Mac Chief Economist Sam Khater.

The spread between mortgage rates and the 10-year Treasury bond remains wider than historical norms, which could indicate mortgage rates have more room to fall in the future, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®.

Many aspiring home buyers may be waiting for rates to dip lower. “Home buyers are facing a more expensive housing market than last year,” Lautz says. “With elevated mortgage interest rates and the rise in home prices, buyers are facing the most challenging affordability conditions” since at least 1989. A new NAR report this week also shows that more than 80% of U.S. markets posted home price gains in the third quarter.

“Incoming data shows that household debt continues to rise, primarily due to mortgage, credit card and student loan balances,” Khater says. “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 9:

• 30-year fixed-rate mortgages: averaged 7.5%, dropping from last week’s 7.76% average. A year ago, 30-year rates averaged 7.08%.
• 15-year fixed-rate mortgages: averaged 6.81%, falling from last week’s 7.03%. A year earlier, 15-year rates averaged 6.38%.