Mortgage rates dip below 7% as the housing outlook brightens for 2024: Freddie Mac

Date:

Mortgage rates continued to drop to more manageable levels with the prospect of further improvement in the New Year as the Federal Reserve is expected to begin dialing back on interest rate increases, according to Freddie Mac.

The average 30-year fixed-rate mortgage was 6.95% for the week ending Dec. 14, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s a decrease from the previous week when it averaged 7.03%. A year ago, the 30-year fixed-rate mortgage averaged 6.31%. 

The average rate for a 15-year mortgage was 6.38%, up from 6.29% last week and up from 5.54% last year. 

“Potential homebuyers received welcome news this week as mortgage rates dropped below seven percent for the first time since August,” said Sam Khater, Freddie Mac’s Chief Economist. “Given inflation continues to decelerate and the Federal Reserve Board’s current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year.”

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.

SOCIAL SECURITY: COLA INCREASING BUT MEDICARE COSTS RISING TOO IN 2024

Mortgage applications increasing

Mortgage applications surged 7.4% this week, up from last week’s 2.8% rise, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) for the week ending Dec. 8, 2023. However, purchase volume was running about 18% below last year’s pace, as prospective homebuyers are still challenged by a lack of inventory, even as rates have decreased.

Refinance volume picked up in response to this rate drop, with a particularly notable increase for FHA and VA refinance applications. The refinance share of mortgage activity increased to 39.2% of total applications from 34.7% the previous week.

“Borrowers who had seen rates near 8 percent earlier this fall are now seeing some lenders quote rates below 7 percent,” Mike Fratantoni, MBA’s SVP and chief economist said. 

If you are interested in taking out a mortgage, you can use an online marketplace to compare your options. Visit Credible to compare multiple lenders at once and choose the one with the best option for you.

HOMEOWNERS COULD SAVE TENS OF THOUSANDS IN DAMAGES BY USING SMART DEVICES

Market needs more homes

The Federal Reserve announced a third interest rate pause during its December meeting on Wednesday, leaving the federal funds rate at a 22-year high of 5.25% to 5.5%. After months of forecasting a higher for longer stance, Fed officials are now predicting rate cuts could come as early as next year, with interest rates expected to tick down to 4.6%, according to the central bank’s updated economic forecasts in its Summary of Economic Projections (SEP).

Fed Chair Jerome Powell said that the federal funds rate could be scaled back to 3.6% by the end of 2025 and 2.9% by year-end 2026 if the economy evolves as projected. However, Powell reiterated the central bank’s commitment to bring inflation to a 2% target rate and did not close the door on further rate increases if inflation increased again.

“While mortgage rates have mirrored the easing in longer-term rates, their levels remain elevated,” Realtor.com Economist Jiayi Xu said. “Notably, approximately two-thirds of outstanding mortgages feature rates below 4%, and over 90% have rates lower than 6%. The disparity between today’s higher market mortgage rates and the lower rates that existing homeowners benefit from on their current mortgages, commonly referred to as the lock-in effect, is expected to play a role in maintaining low inventory levels.”

So even if rates do drop and homebuyers return, this lack of housing inventory is likely to keep prices elevated and keep pressuring affordability, according to Xu. 

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.

MORTGAGE LOAN LIMIT RISES ABOVE $1.1M AS HOME PRICES SURGE

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.

Read the full article here

spot_img

Share post:

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.

Popular

More like this
Related

Stimulant and non-stimulant drugs may improve cognitive function

Stimulant and non-stimulant medications prescribed for ADHD improve cognitive...

Annex Defense Launches Rubber Protective Case For Garmin Xero C1

Posted 1 hour ago in Daily News, Guns &...

Mission First Tactical Custom AR-15 Mags

Next Post Coming Soon...▶ It was back at SHOT Show...

UN Says Both Israel And Hamas Are Guilty Of War Crimes

The United Nations is now saying that both Israel...