Rates Fall To 6.67% - The Mortgage Note

Mortgage rates sank last week, buoying buyers, sellers, and builders’ spirits ahead of the holiday.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.67%, down from the week prior’s 6.95%. A year ago at this time, the 30-year FRM averaged 6.27%.

The 15-year fixed rate dropped as well, down more than 40 bps to 5.95%. A year ago, it averaged 5.69%.

“The 30-year fixed-rate mortgage remained below seven percent for the second week in a row, a welcome downward trend after 17 consecutive weeks above seven percent,” said Sam Khater, Freddie Mac’s Chief Economist.

“Lower rates are bringing potential home buyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects. A rise in home builder confidence, followed by new home construction reaching its highest level since May, signals a response to meet heightened demand as current inventory remains low.”

Housing starts surged to a 6-month high in November, while housing construction rose across all regions.

Builders are feeling confident at year-end, with ongoing inventory problems providing ample opportunity to sell new homes.

But buyers have responded tepidly to sub-7% rates in the last two weeks. A refinance surge shook the market when rates first began falling, but purchase applications in fact fell slightly last week. Homebuyers remain cautious of jumping too soon amid economic uncertainty.

Plus, with competition for limited stock forcing prices up, homeownership remains unaffordable for many Americans despite cooling rates. Just 16% of homes were affordable to the average American in 2023, a record low.

Fannie Mae recently predicted that the single-family market bottomed out in Q4 2023 and will begin “a slow but meaningful recovery over the course of the next year.”