The 30-year fixed-rate mortgage (FRM) continued to trend downward this past week, averaging 6.31%, down slightly from the previous week’s 6.33%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac that was released this past Thursday.
The latest numbers
- 30-year fixed-rate mortgage averaged 6.31% as of December 15, 2022, down from last week when it averaged 6.33%. A year ago at this time, the 30-year FRM averaged 3.12%.
- 15-year fixed-rate mortgage averaged 5.54%, down from last week when it averaged 5.67%. A year ago at this time, the 15-year FRM averaged 2.34%.
What the experts are saying
“Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s chief economist. “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.”
Nadia Evangelou, NAR senior economist and director of real estate research, commented:
“Mortgage rates dropped even further this week as two main factors affecting today’s mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week. The monthly mortgage payment for a home loan of $400,000 is currently $2,480 compared to $2,680 five weeks ago when rates were above the 7% threshold. Although mortgage rates are more than double those of a year ago, home prices continue to be higher than the previous year due to limited inventory. Looking at the housing supply by income level, buyers earning $75,000 face the most significant housing shortage compared to any other income group. In a balanced market, these buyers should be able to afford half of the homes listed for sale. However, these middle-income buyers can afford to buy only 20% of all available listings. As a result, even though there are fewer middle-income buyers in the market, there are still not enough homes for them to purchase.”
Realtor.com manager of economic research, George Ratiu, commented:
“The Freddie Mac fixed rate for a 30-year loan notched a small decline from last week, to 6.31%. The Federal Reserve’s FOMC increased the policy rate by a tamer 50 basis points compared with this year’s prior hikes. While this move was largely expected by investors, the Fed signaled to capital markets at yesterday’s meeting that it sees its aggressive monetary tightening having an effect on inflation. Additionally, this week’s Consumer Price Index data showed continued moderation in the price growth trajectory.
“Fed Chairman Jerome Powell mentioned in his remarks that—with prices still rising at a high rate—more increases are needed and the central bank remains committed to rate hikes until the pace of inflation notches a noticeable slowdown. For investors, the Fed’s tightening still presents the risk of pushing the economy into a recession in 2023. However, while most economic indicators continue to show signs of resilience, some are beginning to show signs of pressure. November’s retail sales declined from the prior month, as higher prices led consumers to pull back on purchases of cars, furniture, building materials, and gasoline.
“For homebuyers and homeowners, the retreat in mortgage rates of the past several weeks has been a welcome development. As mortgage data highlight, applications for both purchases and refinances picked up last week. With more homes available for sale, and more of them sporting price cuts, some buyers are running the math and finding that the slide in rates is offering better options within their budgets.
“For real estate markets more broadly, continued moderation in inflation would diffuse the upward pressure which has led to this year’s surge in mortgage rates. While a return to the 3.0% range is not likely in the near future, even a flattening of rates in the 5.5% – 6.0% range in 2023 would offer housing markets an improved foundation,” Ratiu concluded.
