Rates Remain Effectively Unchanged At 6.62%

Mortgage rates remained basically unchanged last week as markets adjust to economic expectations for 2024.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.62%, inching up from the week prior’s 6.61%. A year ago at this time, the 30-year FRM averaged 6.48%.

This is the first increase since October. Rates have fallen more than a full percentage point since then, giving homebuyers more breathing room as they struggle against record-high unaffordability.

The 15-year fixed rate dropped, however, from 5.93% to 5.89%. A year ago, it averaged 5.73%.

Freddie Mac Chief Economist Sam Khater ascribed the news to the slow machinations of the market as it “digests incoming economic data.” He pointed out that rates stopped their freefall in mid-December when the Federal Open Market Committee held its latest meeting.

The Central Bank held the benchmark rate steady at that meeting and suggested three quarter-point rate cuts may be coming in 2024. But Fed Chairman Jerome Powell also emphasized that the Fed is committed to bringing inflation down to 2%, which might not be achievable until 2026.

“The lower inflation readings over the past several months are welcome, but we will need to see further evidence to build confidence that inflation is moving down sustainably toward our goal,” he said in prepared remarks.

Analysts largely expect rate cuts in 2024 but have pushed their timeline back from March to at least May.

Low inventory has kept purchase applications low despite rapid rate decreases. But housing starts surged to an unexpected 6-month high in November, and permits for new single-family construction also increased, signaling a strong start to the new year for homebuilders.