The 30-year fixed-rate mortgage (FRM) averaged 6.42% this week, up from 6.27% the previous week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.42% as of December 29, 2022, up from last week when it averaged 6.27%. A year ago at this time, the 30-year FRM averaged 3.11%.
- 15-year fixed-rate mortgage averaged 5.68%, down from last week when it averaged 5.69%. A year ago at this time, the 15-year FRM averaged 2.33%.
What the experts are saying:
“The housing market remains in the doldrums with declining sales, inventory and prices,” said Sam Khater, Freddie Mac’s chief economist. “The declines in sales and deceleration in home prices began swiftly earlier in 2022 but have moderated more recently. While the intensity of weakness is moderating, the market continues to decline and forward leading indicators suggest housing will remain weak throughout the winter.”
Realtor.com manager of economic research, George Ratiu, commented:
“The Freddie Mac fixed rate for a 30-year loan started the year moving sideways, mirroring the trend in the 10-year Treasury. Capital markets are reacting to the uncertainty brought about by the dichotomy between mounting recession expectations and incoming economic data which show continued resilience.
“With a Federal Reserve committed to bringing inflation down, investors expect business investments and consumer spending to pull back. However, with most Americans still employed and seeing modest pay gains, the pullback in spending has yet to meaningfully materialize. And with more than 10 million open jobs and still not enough applicants to fill them, the labor market would have to experience a sharp and significant drop to move the needle on spending. This scenario is more likely if corporate executives overreact to the recession chatter and preemptively cut payrolls which would create a self-fulfilling downward spiral.
“Real estate markets are firmly in the winter season, with high prices and rates creating a barrier for many buyers on the road to homeownership. Even as prices dropped 10% from the summer peak nationally, home values were still up by double-digits from last year in 79 out of the top 150 largest metros during November 2022. With the 30-year mortgage rate at 6.4%, the buyer of a median-priced home is looking at a monthly payment that is 60% higher than last year. We may have to wait until the start of the spring shopping season for more clarity on the direction of housing markets this year, especially as both buyers and sellers are pulling back from the marketplace,” Ratiu concluded.
