The 30-year fixed-rate mortgage (FRM) decreased for the fifth straight week, from last week’s average of 7.29% to an average of 7.22% this 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 7.22%, down from last week when it averaged 7.29%. A year ago at this time, the 30-year FRM averaged 6.49%.
- 15-year fixed-rate mortgage averaged 6.56%, down from last week when it averaged 6.67%. A year ago at this time, the 15-year FRM averaged 5.76%.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” said Sam Khater, Freddie Mac’s chief economist. “The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels. The modest uptick in demand over the last month signals that there will likely be more competition in a market that remains starved for inventory.”
Realtor.com Economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage continued its downward trend this week. While some Federal Reserve policymakers expressed growing confidence that the existing monetary policy is sufficiently restrictive to reduce inflation to the 2% target, others emphasized the potential necessity for additional rate hikes to achieve the target over a reasonable timeframe. Despite the mixed messages from the Fed, many investors are inclined to believe that the Federal Reserve has concluded its interest rate hike cycle, especially considering the 10-year yield dropped below 4.3% for the first time since September.
“According to Realtor.com’s 2024 Forecast, the average mortgage rate is projected to be 6.8% in the next year. As mortgage rates are expected to remain elevated, current homeowners with low mortgage rates are expected to stay put, leading to a decline in for-sale inventory. Meanwhile, as affordability remains the top concern in home purchasing, the outlook for home sales in 2024 is projected to remain steady at lower levels. The good news for prospective homebuyers is that affordability is expected to turn around in 2024, though at a slower pace, through a combination of lower mortgage rates and lower prices brought about by cooling inflation and a less frenzied housing market. With a shift in the mortgage rate trend from a general increase to a general decrease, there is a likelihood that consumers may no longer feel the urgency to make hasty decisions.”