The 30-year fixed-rate mortgage (FRM) decreased for the seventh straight week, from last week’s average of 7.03% to an average of 6.95% 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 6.95%, down from last week when it averaged 7.03%. A year ago at this time, the 30-year FRM averaged 6.31%.
- 15-year fixed-rate mortgage averaged 6.38%, up from last week when it averaged 6.29%. A year ago at this time, the 15-year FRM averaged 5.54%.
The takeaways:
“The 30-year fixed-rate mortgage averaged near 7% this week, down from nearly 7.80% just six weeks ago,” said Sam Khater, Freddie Mac’s Chief Economist. “When rates began to rapidly drop, purchase applications rebounded initially, but this improvement in demand diminished in the last week. Although these lower rates remain a welcome relief, it is clear they will have to further drop to more consistently reinvigorate demand.”
Realtor.com Economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage continued its downward trend this week as markets absorbed the latest statements from FOMC. Despite the increase in job growth and the decrease in the unemployment rate in November, the overall trend indicates a slowdown in the labor market. Additionally, the improved Consumer Price Index (CPI) suggests that the Federal Reserve’s historic monetary tightening measures are effectively curbing inflation. Consequently, in its December FOMC meeting, the Federal Reserve opted to maintain the short-term policy rate within the range of 5.25 to 5.5 percent. Meanwhile, the Fed has released its Summary of Economic Projections, revealing a lower median expectation for the Fed Funds rate at the end of 2024, now at 4.6%, down from 5.1% in September.
“While mortgage rates have mirrored the easing in longer-term rates, their levels remain elevated. Notably, approximately two-thirds of outstanding mortgages feature rates below 4%, and over 90% have rates lower than 6%. The disparity between today’s higher market mortgage rates and the lower rates that existing homeowners benefit from on their current mortgages, commonly referred to as the lock-in effect, is expected to play a role in maintaining low inventory levels. As home shoppers compete over the still-limited inventory, prices are expected to stay elevated, maintaining affordability as a top concern. Put differently, having the ability to access a broader array of home options is a pivotal factor in the current real estate landscape. A recent study by Realtor.com discovered that flexible work modes could enable home buyers to broaden their search parameters for a more extensive selection of homes. Additionally, there is evidence indicating that individuals in the least affordable markets leverage flexible work arrangements to move out of costly urban areas, addressing affordability concerns in the process.”
