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Home mortgage rates continued to plunge this week – good news for home buyers who have been facing the least affordable housing market since the 1980s.
After dropping under 7% last week for the first time since mid-August, rates fell again this week. The 30-year fixed-rate mortgage rate fell to an average of 6.67% in the week ending December 21, down from 6.95% the previous week, according to data from Freddie Mac released Thursday. A year ago, the average 30-year fixed-rate was 6.27%.
It was the eighth-straight week of declines, dragged lower by the anticipation of Federal Reserve rate cuts beginning next year.
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit. A current buyer’s rate may be different.
“Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market,” said Sam Khater, Freddie Mac’s chief economist said in a statement.
Rates expected to continue falling
With the Fed signaling in its most recent meeting that rate cuts may be coming in 2024, many experts are expecting mortgage rates to continue falling.
While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. Mortgage rates track the yield on 10-year US Treasuries, which move up or down based on anticipation about the Fed’s actions, the Fed’s policy changes and investors’ reactions to them.
The average on a fixed-rate mortgage rate is forecast to fall to 6.5% by mid-year and is expected to decline further, reaching 6.2% by the end of next year, according to many projections.
Lower rates will improve affordability. At 7.5%, the typical monthly payment on a loan for a $800,000 home is about $6,000. If a buyer had a rate of 6.2%, that monthly payment drops to about $5,400.
If you have any questions or would like personalized advice regarding the current market conditions, please feel free to reach out. Your success in real estate is my top priority.
Wishing you a Merry Christmas and a Happy Holiday!
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