Mortgage rates dipped again this week, a downward pattern in recent weeks that economists say is providing a much-needed boost to the housing market.
This week, the 30-year fixed-rate mortgage (FRM) averaged 6.15%, down from 6.33% last week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers
- 30-year fixed-rate mortgage averaged 6.15% as of January 19, 2023, down from last week when it averaged 6.33%. A year ago at this time, the 30-year FRM averaged 3.56%.
- 15-year fixed-rate mortgage averaged 5.28%, down from last week when it averaged 5.52%. A year ago at this time, the 15-year FRM averaged 2.79%.
What the economists are saying
“As inflation continues to moderate, mortgage rates declined again this week,” said Sam Khater, Freddie Mac’s chief economist. “Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment. Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.”
Realtor.com economist, Jiayi Xu, commented:
“The Freddie Mac fixed rate for a 30-year loan continued to retreat this week, to 6.15%, following in the footsteps of the 10-year Treasury, which dropped from 3.75% at the beginning of the month to 3.37% yesterday. Although the slower inflation rate in December is a positive sign, concerns from businesses and investors about economic growth continue to rise as weaker retail sales data remind us that the U.S. consumer is not invincible. While many industries are tightening their belts in advance to prepare for a possible recession, tech companies seem to be particularly affected. Yesterday’s news showed that at least 10,000 tech jobs are being cut, adding to an already-sizeable total for the sector. Nevertheless, through December, nationwide unemployment remained at long-term lows, as business and investors continued to watch for the end to the Fed’s rate hiking in order for confidence to return to the market.
“With the Fed tightening its monetary policy, the U.S. housing market has been under significant pressure. While our 2023 forecast anticipates ongoing inflation causing upward pressure on rates, recent favorable data has helped to pull mortgage rates down. As the economy weathers the easing in inflation, mortgage rates may continue to fluctuate in the short term, within the 6%-7% range that we have seen over the past five months. While recent lower mortgage rates have improved home buyers’ sentiment slightly, they remain more than twice as high as they were one year ago, and still create financial barriers for many buyers, especially first-time homebuyers. Acknowledging the particular challenges faced by this group, Realtor.com’s Best Markets for First-Time Homebuyers report highlights 10 housing markets with a great mix of more affordable homes, job opportunities, and amenities for first-time homebuyers which make them attractive for young families.
“For people who are thinking about selling their home, current market conditions may be causing them to hold off. Recent data show that December home sellers faced more competition from other potential sellers, longer time on market, and a greater likelihood of having to lower their asking price. Homeowners looking to sell and buy at the same time, who are likely to have a good rate on their current mortgage, may be hesitant to list their homes for sale and face today’s high mortgage rates and home prices. Some are waiting to see if the market improves before putting their home up for sale.”
