Mortgage rates in the United States have dropped to below 7% for the first time since August. This decline comes in response to signs of a cooling U.S. economy following indications from the U.S. Federal Reserve about potential interest rate cuts.
According to data released by Freddie Mac on Thursday, the 30-year fixed-rate mortgage fell for the seventh consecutive week, now averaging 6.95% as of December 14th. This represents an 8 basis point decrease from the previous week’s average of 7.03%. For comparison, a year ago, the average rate for a 30-year fixed-rate mortgage was at 6.31%.
In the same time frame, the average rate on a 15-year mortgage increased slightly to 6.38% from the previous week’s average of 6.29%. However, this is still significantly lower than the rate of 5.54% recorded a year ago.
Freddie Mac’s weekly report on mortgage rates is compiled from thousands of applications received from lenders across the country when borrowers apply for a mortgage. Additional data collected by Mortgage News Daily indicates that as of Thursday afternoon, the 30-year fixed-rate mortgage was averaging at 6.62%.
Insight from Freddie Mac
Freddie Mac’s chief economist, Sam Khater, stated, “Given inflation continues to decelerate and the Federal Reserve Board’s current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year.”
Influence on Prospective Sellers
Lisa Sturtevant, chief economist at Bright MLS, highlighted the unusual nature of the current housing market. She explained, “We often talk about how lower mortgage rates will bring more buyers into the market. But in this very unusual market, where inventory has been locked down, it is more important to watch how falling rates influence prospective sellers’ decisions.”
Sturtevant elaborated on the reluctance of homeowners to sell when their current mortgage rates are lower than what they would get with new loans. However, she noted that life changes, be it personal or financial, may push homeowners to move, even if it means giving up their low rate.
To conclude, on Thursday at midday, the 10-year Treasury note stood at a rate of 3.9%.