Lowest Mortgage Rates Since August Recorded

Lowest Mortgage Rates Since August - A Game-Changer for Homebuyers | Mr. Business Magazine

In a notable trend, mortgage rates continued their downward trajectory this week, marking the sixth consecutive week of declines. This recent development is a reversal of the preceding seven weeks, during which mortgage rates experienced continuous increases.

Data from Freddie Mac, released on Thursday, reveals that the average 30-year fixed-rate mortgage dropped to 7.03% in the week ending December 7, down from the previous week’s 7.22%. In comparison to the same period a year ago, when the average 30-year fixed-rate stood at 6.33%, the current rates reflect an upward shift.

A Positive Development:

The recorded average rates are derived from mortgage applications received by Freddie Mac from a myriad of lenders across the nation, focusing on borrowers who put down 20% and possess excellent credit. Notably, the current buyer’s rate may vary. While the decline in rates is considered a positive development, Sam Khater, Chief Economist at Freddie Mac, highlights the need for further reductions to consistently stimulate demand.

Having peaked above 7% in mid-August and reaching as high as 7.79% by the end of October, the recent decline in rates suggests a potential shift, providing relief for prospective buyers in what has been described as the least affordable housing market since the 1980s. Mortgage applications have responded positively, increasing for the fifth consecutive week, according to the Mortgage Bankers Association.

Bob Broeksmit, CEO of MBA, interprets this surge in applications as a strong indication of rising borrower demand following the recent decline in mortgage rates. The overall market outlook is improving as the year concludes, with mortgage rates down nearly a full percentage point from their recent highs a few months ago.

Mortgage Rates Fall to a 4-Month Low, Biggest Decline since 2008 Housing Crash

Stats of Home Purchases:

However, despite the favorable drop in rates, mortgage applications to purchase homes are 17% lower than a year ago, constrained by low inventory and persistent affordability challenges. Fannie Mae’s Home Purchase Sentiment Index indicates that only 14% of consumers considered November a good time to buy a home, reaching a record low. Pessimism about the housing market has been fueled by high home prices and mortgage rates.

The survey further reveals that while consumers expect mortgage rates to either increase or remain stable, their sense of financial security has diminished. As investors and analysts turn their attention to the upcoming Fed meeting, recent economic data suggesting a potential end to rate hikes has boosted confidence.

Federal Reserve Chairman Jerome Powell’s remarks, coupled with a cooling labor market, have contributed to a decline in the 10-year treasury yield to its lowest level in three months. While the Fed doesn’t directly set mortgage rates, its actions influence them, with mortgage rates tracking the yield on 10-year US Treasuries. As the outlook anticipates sustained improvement in inflation, some predict a further drop in mortgage rates to 6.5% by the end of 2024. Nevertheless, ongoing high housing costs indicate a continued cooling trend in the nationwide housing market.

Curious to learn more? Explore our articles on: Mr. Business Magazine

Share Now: