Mortgage Rates Inch Up Slightly

The 30-year fixed-rate mortgage (FRM) increased slightly this week, from last week’s average of 6.6% to an average of 6.69% this week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.

This week’s numbers:

  • The 30-year FRM averaged 6.69%, up from last week when it averaged 6.6%. A year ago at this time, the 30-year FRM averaged 6.13%.
  • The 15-year FRM averaged 5.96%, up from last week when it averaged 5.76%. A year ago at this time, the 15-year FRM averaged 5.17%.

The takeaways:

“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” said Sam Khater, Freddie Mac’s chief economist. “Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace.” Economist Jiayi Xu commented: 

“The Freddie Mac fixed rate for a 30-year mortgage ticked up 0.09 percentage points to 6.69% this week, with all eyes focused on the upcoming FOMC meeting. The higher-than-expected inflation and retail sales data in December have caused a decline in market confidence regarding the Fed’s readiness to implement interest rate cuts. While interest rates have stopped rising, the persistently high-rate environment continues to affect the economy as thousands of tech workers were laid off in the first month of 2024. In fact, the Federal Reserve is now facing a new challenge: determining the optimal timing for a shift to rate cuts. The central bank faces the dilemma of potential negative impacts on the economy if the current restrictive policy persists longer and the risk of a dangerous rebound in inflation in 2024 if rates are cut prematurely.

“With mortgage rates dropping more than a percentage point from their recent peak, recent housing data reflected the market’s sensitivity to this decline. The easing of mortgage rates have bolstered home-builder optimism with year-over-year growth observed in both overall housing starts and single family starts. Meanwhile, with expected lower mortgage rates ahead, a survey showed that first-time buyers felt optimistic about 2024.  

“While softness in mortgage rates may encourage some buyers to re-enter the market, given that approximately  two-thirds of outstanding mortgages currently boast rates below 4%, a notable portion of existing homeowners may opt to postpone their buying and selling plans, and wait for the potential for even lower rates before making decisions about their next residences. As a result, we expect the 2024 housing market will continue to be slow, particularly in light of the still-climbing existing home sales prices in December 2023.”

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