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Mortgage Rates Drop to 6.31%: Freddie Mac
By Leslie Cook MONEY RESEARCH COLLECTIVE
Average 30-year rates have declined for five straight weeks.
Mortgage rates continued to slide this week, according to Freddie Mac.
The average rate on30-year fixed-rate mortgage is now 6.31% — down from 6.33% one week ago. Average 30-year rates have declined for five straight weeks, dropping a total of 0.77 percentage points since peaking at 7.08% in early November. Average rates on 15-year fixed-rate loans are also lower this week, averaging 5.54%.
“Mortgage rates continued their downward trajectory this week, as softer data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand. The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.”
The number of mortgage applications increased by a seasonally adjusted 4% for the seven-day period ending December 9, according to the Mortgage Bankers Association. Still, the slight week-to-week increase in purchase applications is a far cry from the frenzied market of 2021. Compared to the same week last year, the total number of purchase applications was down by 38%.
“The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months,” said Joel Kan, vice president and chief deputy economist for the MBA, in a press release.
Mortgage rates tick lower
Rates moved slightly lower today as the mortgage market balanced positive economic news with the Federal Reserve’s commitment to continuing to fight inflation aggressively.
The market received some good news on Tuesday as the Bureau of Labor Statistics released data that showed the Consumer Price Index increased by 0.1% from October to November, lower than the 0.3% month-over-month increase expected by economists. Year-over-year, inflation eased down to 7.1%, which was also lower than anticipated.
The lower inflation numbers sent stock prices soaring and Treasury yields tumbling as the market absorbed the positive news. The news also spurred hope that the Fed’s plan to bring inflation back under control was finally seeing results.
Wednesday, the Fed announced a 0.50 hike in the federal funds rate, bringing the short-term interest rate banks charge each other to borrow money up to 4.5%. The increase was the seventh this year, but the smallest since May. The previous four rate hikes were 0.75 percentage points each and helped send consumer interest rates, including those for mortgages, skyrocketing.
Although the smaller rate hike was anticipated, observers were also looking forward to learning about the Fed’s plan for 2023. The hope was that the central bank would back off implementing more rate hikes. Those hopes were not met.
In his comments following the end of the FOMC meeting, Fed chairman Jerome Powell reiterated the central bank’s commitment to bringing inflation down to its target range of 2% and that more work needed to be done.
“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” said Powell in a statement announcing the rate increase.
Powell left the door open for a change in direction if necessary. “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” added Powell.
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Leslie Cook is the Lead Mortgage Reporter covering real estate and mortgages for Money. She started out over 30 years ago as a business reporter with Caribbean Business newspaper in San Juan, Puerto Rico, covering computers, and human resources. Her work has also appeared in Reuters and she graduated Cum Laude from Bryn Mawr College in Pennsylvania with a bacheloru2019s degree in history.