The 30-year fixed-rate mortgage (FRM) edged down again this week, averaging 6.09%, down from 6.13% the previous week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday. The news follows the more modest 25-basis-point interest rate hike announced by the Federal Reserve Wednesday afternoon–which experts say signals that the central bank is growing more confident in the battle against inflation.
Taking a look at this week’s numbers:
- 30-year fixed-rate mortgage averaged 6.09% as of February 2, 2023, down from last week when it averaged 6.13%. A year ago at this time, the 30-year FRM averaged 3.55%.
- 15-year fixed-rate mortgage averaged 5.14%, down from last week when it averaged 5.17%. A year ago at this time, the 15-year FRM averaged 2.77%.
What the experts are saying:
“Mortgage rates inched down again, with the 30-year fixed-rate down nearly a full point from November, when it peaked at just over seven percent,” said Sam Khater, Freddie Mac’s chief economist. “According to Freddie Mac research, this one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price.”
Realtor.com manager of economic research, George Ratiu, commented:
“The Freddie Mac fixed rate for a 30-year loan declined again from last week, to 6.09%, following the trajectory of the 10-year Treasury. With inflation pressures easing, mortgage originators have followed suit, lowering the cost of borrowing. At the same time, the Federal Reserve’s monetary tightening is pushing short-term borrowing costs higher. With the Fed’s policy rate underpinning the prime rate, a host of credit products are seeing higher rates, including credit cards, auto loans and adjustable-rate mortgages. In effect, the Fed’s actions are keeping a floor under mortgage rates for the short term. I expect rates to stay around 6% for the next few weeks.
“As we move through the year, incoming economic data will play a role in the trajectory of interest rates. Most recent indicators point to a still-resilient economy. This week’s report on job openings and quits underscored that fact, showing that companies have 11 million unfilled positions, and more than 4 million workers left their employer for better opportunities. Moreover, initial jobless claims dipped below the 200,000 threshold for the past two weeks.
“For housing markets, lower rates have eased the financial burden on homebuyers. In addition, January’s housing market data showed a growing number of homes for sale, properties lingering longer on the market, and prices down 11% from their 2022 peak. For today’s buyer of a median-priced home, the down payment amount is lower than it would have been last summer. And at today’s rate, the monthly payment is $1,937, about $10 lower than the first week in June 2022, when the interest rate was a percentage point lower. While that is positive news, affordability remains a primary challenge, especially for first-time buyers.”