With mortgage rates continuing their descent in recent weeks, borrowers who faced rates topping out at over 8% last year, drove a surge in refinance applications this past week; we may also see further refi activity ahead, as rates continued their decline this week.
The 30-year fixed-rate mortgage (FRM) averaged 6.60%, down from last week’s 6.69%, according to this week’s Primary Mortgage Market Survey® (PMMS®), from Freddie Mac, released Thursday
“The 30-year fixed-rate mortgage decreased for the third consecutive week,” said Sam Khater, Freddie Mac’s chief economist. “The combination of mortgage rate declines, firm consumer income growth and a bullish stock market have increased homebuyer demand in recent weeks.”
This week’s numbers: The 30-year FRM averaged 6.60% as of December 12, 2024, down from last week when it averaged 6.69%. A year ago at this time, the 30-year FRM averaged 6.95%. And the 15-year FRM averaged 5.84%, down from last week when it averaged 5.96%. A year ago at this time, the 15-year FRM averaged 6.38%.
But Khater also cautioned, “While the outlook for the housing market is improving, the improvement is limited given that homebuyers continue to face stiff affordability headwinds.”
Realtor.com Sr. Economist, Ralph McLaughlin, agreed, but noted a combination of events in the new year could lead to more affordable home prices.
“Looking ahead, mortgage rates are expected to keep mortgage payments essentially unchanged in 2025 despite continued home price growth,” McLaughlin said. “However, higher economic growth under a Trump administration—which markets are currently anticipating—could lead to a boost in incomes. And if effective household tax rates go down, as promised by the Trump campaign, we could see a net increase in disposable household income even if incomes don’t rise.
“If both income growth and lower tax rates come to fruition, we could see homes become somewhat more affordable in 2025 than in the past few years,” he added. “The wild card, of course, is how other policies of a new Trump administration affect the price of other goods and services.”
To read the full report, click here.
