Mortgage Rates Decline, Reversing One-Week Uptick

Mortgage rates reversed a one-time uptick and fell last week, giving potential buyers even more breathing room.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.63%, down from the week prior’s 6.69%. A year ago at this time, the 30-year FRM averaged 6.09%.

Rates have now been largely stable, within the mid-6’s, for almost two months.

The 15-year fixed also decreased to 5.94% from 5.96%. A year ago, it averaged 5.14%.

“Although affordability continues to impact homeownership, the combination of a solid economy, strong demographics, and lower mortgage rates are setting the stage for a more robust housing market,” said Sam Khater, Freddie Mac’s Chief Economist.

Khater noted that expected disinflation should push rates down further as the year progresses.

“The economy continues to outperform due to solid job and income growth, while household formation is increasing at rates above pre-pandemic levels. These favorable factors should provide strong fundamental support to the market in the months ahead,” he said.

Whether the Central Bank agrees with this premise is still up for debate, however. The Federal Reserve declined to cut interest rates at its January meeting, and officials indicated they’re not seriously considering it yet.

The group’s statement did eliminate language suggesting the Fed may keep hiking rates until inflation is headed toward 2% (a change from previous sentiment). But Chairman Jerome Powell insisted a March rate cut is unlikely. 

“We want to see more good data. It’s not that we’re looking for better data, we’re looking for a continuation of the good data we’ve been seeing,” he said.

While cuts would help the overall housing market, other problems may keep buyers sidelined. More Americans are touring homes now that moderating rates have expanded their options, but stock shortages have kept home prices inflated. Purchase applications have actually declined, and Redfin says pending sales saw a huge drop.

“I thought declining mortgage rates and more inventory would cause the market to take off right at the start of the new year. But even though demand has picked up some, I’m not wowed,” one agent in Seattle noted.

Read More Articles:

Powell Responds To Legislative Pressure As Feds Hold Rates Steady

Americans Touring Homes But Not Yet Buying

To Buy Or Not To Buy? Homeowners Offer Insights

Listen To Our Podcast:

Sign up for our free newsletter.