The 30-year-fixed-rate mortgage remained flat this week, averaging 6.62%, relatively the same as last week’s decline to 6.61%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac.
This week’s numbers:
- The 30-year FRM averaged 6.62 percent as of January 4, 2024, up slightly from last week when it averaged 6.61 percent. A year ago at this time, the 30-year FRM averaged 6.48 percent.
- The 15-year FRM averaged 5.89 percent, down from last week when it averaged 5.93 percent. A year ago at this time, the 15-year FRM averaged 5.73 percent.
What the experts are saying:
“Between late October and mid-December, the 30-year fixed-rate mortgage plummeted more than a percentage point. However, since then rates have moved sideways as the market digests incoming economic data,” said Sam Khater, Freddie Mac’s chief economist. “Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, we expect mortgage rates will continue to drift downward as the year unfolds. While lower mortgage rates are welcome news, potential homebuyers are still dealing with the dual challenges of low inventory and high home prices that continue to rise.”
Realtor.com Senior Economic Research Analyst Hannah Jones commented:
“The Freddie Mac fixed rate for a 30-year loan leveled off this week, increasing just 1 basis point to 6.62% as the new year began and markets adjusted to incoming economic data. The recent mortgage rate plummet past 7% is likely to bring some buyers into the market. Per a recent Realtor.com survey, 11% of prospective buyers say rates would need to dip below this threshold to make it feasible for them to purchase their next home. Though the recent decline in rates has inspired optimism, 12% of prospective homebuyers say rates would need to dip below 6% and more than one-quarter (28%) say rates would need to dip below 4% to bring them into the market. The typical outstanding mortgage has a rate of less than 4%, more than 2.5 percentage points below today’s rate. This gap is likely to keep many sellers on the sidelines, waiting for mortgage rates to come down further.
“Pending home sales leveled off in November, matching the previous month’s record-low level. Mortgage rates fell each week in November, but remained above 7% throughout the month, which kept contract signings stable at a low level. Moving forward, the continued decline in mortgage rates will be contingent on cooling inflation and employment data. This week’s Job Openings and Labor Turnover data showed slowing hires and separations, suggesting that Friday’s employment data may follow suit and continue to slow. The current path of falling inflation and employment activity suggests that the Fed’s goal of a ‘soft landing’ may be within reach. Though 2% inflation has not yet been achieved, progress towards this level is good news for the housing market,” Jones concluded.
