Mortgage Rates Remain on Downward Trend Heading Into the New Year

The 30-year fixed-rate mortgage (FRM) averaged 6.61%, down from last week’s dip to 6.67%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.

This week’s numbers:

The 30-year FRM averaged 6.61% as of December 28, 2023, down from last week when it averaged 6.67%. A year ago at this time, the 30-year FRM averaged 6.42%.
The 15-year FRM averaged 5.93%, down from last week when it averaged 5.95%. A year ago at this time, the 15-year FRM averaged 5.68%.

What the experts are saying:

“The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down,” said Sam Khater, Freddie Mac’s chief economist. “Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.”

Realtor.com Economist, Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year loan continued its downward trend this week to 6.61%. As the Federal Reserve’s projections fueled confidence among investors, the 10-year treasury yield remained below 3.9%. However, it is important to note that it is a general ‘noisy’ period during this time of the year due to holiday-driven fluctuations. Meanwhile, as the market’s focus shifted from ‘whether to cut interest rates’ to ‘when to cut interest rates’, the jobs report scheduled to release next Friday will give us a clear picture of the Fed’s next move.

“As mortgage rates increased sharply from 6.9% in August to 7.8% by the end of October, competition over limited inventory pushed home prices up year-over-year even in the face of lower sales activity. However, in recent weeks there have been significant improvements in mortgage rates, notably falling below 7%. Although this hasn’t translated into a substantial sales recovery yet, there’s a positive development as November existing home sales registered an increase for the first time in five months. This suggests that if the current rate improvements can be sustained, buyer demand might be strong enough to fuel a more robust home sales season than initially anticipated in Realtor.com’s 2024 Housing Forecast. Specifically, we anticipate notable sales and price growth in many affordable metro areas next year, as highlighted in the Top Housing Markets of 2024. Additionally, potential first-time homebuyers could find relief in the rental market, with rents experiencing a year-over-year decline for the seventh consecutive month in November.”