In the week ending December 7, mortgage rates continued their decline, with the 30-year fixed-rate mortgage slipping to 7.03%, down from 7.22% the previous week, according to Freddie Mac’s Primary Mortgage Market Survey. A year ago, the 30-year rate averaged 6.33%. The 15-year mortgage rate also decreased to 6.29% from 6.56% the previous week but was up from 5.67% a year ago.
The recent rate shift has prompted some buyers to reenter the market, but the ongoing challenge remains the lack of affordable inventory. According to Freddie Mac, the housing market is not likely to see significant changes until rates take a more substantial downward turn or enough existing homeowners decide to list their properties.
Freddie Mac Chief Economist Sam Khater noted the positive impact of lower rates on purchase applications initially, but this demand improvement diminished in the last week. While lower rates are welcomed, Khater emphasized the need for further decreases to consistently reinvigorate demand.
Homebuyers seeking the best mortgage rates are encouraged to shop around and compare options. Online marketplaces like Credible provide the ability to compare rates, choose loan terms, and get preapproved with multiple lenders simultaneously.
Future Mortgage Rate Outlook
Mortgage rates are expected to continue declining if the Federal Reserve maintains its current monetary policy. With the Fed raising interest rates 11 times since March of last year, the federal funds rate is now at a 22-year high of 5.25% to 5.5%, aimed at slowing the economy and curbing inflation. Recent data showed a moderation in inflation growth to 3.2% in October.
The anticipated decrease in mortgage rates is expected to improve affordability, attracting more buyers. Realtor.com predicts the typical monthly purchase cost for a median-priced home listing to be slightly less than $2,200 in 2024, down from $2,240 this year.
Realtor.com Economist Jiayi Xu stated that sustained improvement in inflation could bring the mortgage rate down to 6.5% by the end of 2024. However, ongoing high housing costs suggest that the cooling trend in the nationwide housing market may persist.
Despite the potential for lower rates, a record 86% of Americans, according to Fannie Mae’s Home Purchase Sentiment Index, believe now is a bad time to buy a home. High home prices and mortgage rates were cited as the primary reasons for this sentiment.
If you’re considering a mortgage, utilizing online marketplaces like Credible can help compare options without affecting your credit score.
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