30-year mortgage rate stabilizes in 6.6% range, draws buyers back: Freddie Mac

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Mortgage rates inched up slightly this week but have held steadily within the 6.6% range for weeks now, giving borrowers an incentive to return to the housing market, according to Freddie Mac. 

The average 30-year fixed-rate mortgage was 6.69% for the week ending Jan. 25, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s a slight increase from the previous week when it averaged 6.60%. A year ago, the 30-year fixed-rate mortgage averaged 6.13%. 

The average rate for a 15-year mortgage was 5.96%, up from 5.76% last week and up from 5.17% last year.

Between late October and January, mortgage rates dropped more than a percentage point. Rates have stabilized in the mid-6% range, encouraging some buyers to return to the market, according to Freddie Mac’s Chief Economist Sam Khater. 

“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” Khater said. “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.”

Homebuyers can find the best mortgage rate by shopping around and comparing options. You can visit an online marketplace like Credible to compare rates, choose your loan term, and get preapproved with multiple lenders at once.

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New home sales increase

New home sales volumes increased more than projected, proving that the housing market is thawing. Sales of new single‐family houses in December 2023 were at a seasonally adjusted annual rate of 664,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.0% above the revised November rate of 615,000 and 4.4% above the December 2022 estimate of 636,000.

An estimated 668,000 new homes were sold in 2023 – 4.2 % more than the 2022 figure of 641,000.

“There are several nuggets of positivity in the market currently,” Charles Williams, CEO of Percy, a real estate and mortgage behavioral analytics firm, said. “Fundamentals are generally improving across the board, and we expect homebuying activity to continue to pick up through the year as 30-year mortgage rates will likely close out 2024 at around 6%. 

“Home prices are likely stabilizing as well, so smart homebuyers will get in on the market ASAP, as the average monthly mortgage payment is not going to get that much cheaper in the months ahead,” Williams continued.

If you are looking to take advantage of the current mortgage rates by refinancing your mortgage loan or are ready to shop for the best rate on a new mortgage, consider visiting an online marketplace like Credible to compare rates and get preapproved with multiple lenders at once.

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Home prices cool, slightly 

U.S. home prices climbed 0.4% month over month in December, the smallest increase since June, according to the Redfin Home Price Index (RHPI). In January, the typical home in the U.S. was $344,000 with a monthly mortgage payment, assuming 20% down, of $1,790, according to Zillow. 

There’s little chance that home prices will drop meaningfully this year since many existing homeowners are locked into below 4% mortgage rates. That means the market is likely to remain competitive for what supply does come to market and home prices will continue to strengthen, even as mortgage rates decline.

“We are likely to see a soft but steady rebound in home sales, which reflect pent-up demand and optimism that has built over expectations of lower mortgage rates,” CoreLogic Chief Economist Dr. Selma Hepp said in a statement. “However, home affordability will not improve greatly this year as prices continue to rise and mortgage rate decline remains marginal.”

If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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