Rates Decline Again, Further Evidence They May Have Peaked

Mortgage interest rates fell again last week to 6.49%, Freddie Mac reported Thursday.

Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.49%, down from 6.58% the week prior.

Weeks of decline have made some analysts optimistic that rates have peaked.

“We probably have seen peak mortgage rates unless there is some other major shock to the economy,” Cris deRitis, deputy chief economist at Moody’s Analytics, told NextAdvisor.

The 15-year fixed-rate mortgage also fell from 5.90% to 5.76%. A year ago, it averaged 2.39%.

“Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes,” said Sam Khater, Freddie Mac’s Chief Economist. 

“Even as rates decrease and house prices soften, economic uncertainty continues to limit homebuyer demand as we enter the last month of the year.”

Federal Reserve Chairman Jerome Powell signaled this week that the government may slow the pace of interest rate increases as soon as December.

“The time for moderating the pace of rate increases may come as soon as the December meeting,” he said during a Brookings Institution event.

But he emphasized that serious changes to monetary policy are still a distant dream.

“Despite some promising developments, we have a long way to go in restoring price stability,” he noted.

The remarks follow several indicators of cooling inflation. Both headline inflation and core prices saw unexpectedly large declines recently.

These are not indicators of a completely recovered economy, though. Federal Reserve Governor Christopher Waller warned against premature assessments that inflation has peaked.

“I will not be head-faked by one report,” he said. “We’ve seen this movie before.”

Waller said he was open to a reduced half-point rate increase in December, but reiterated that a full pause is unlikely.