Mortgage rates keep downward trajectory to close out 2022: Freddie Mac
Home sales dropped again in November but demand is slowly building
The steady decline in mortgage rates is good news for buyers sidelined by expensive borrowing costs, but the housing supply has been slow to build, according to Freddie Mac. (iStock)
Last week, mortgage rates dropped for the sixth consecutive week as the market continues to react to positive economic indicators, according to Freddie Mac.
The average rate for a 30-year fixed-rate mortgage fell to 6.27% for the week ending Dec. 22, according to Freddie Mac's Primary Mortgage Market Survey. This was a decrease from the previous week when it averaged 6.31%, yet it remains significantly higher than last year when it was 3.05%.
The average rate for a 15-year mortgage was 5.69% last week, up from 5.54% the week before and up from 2.30% last year.
The steady decline in mortgage rates is good news for buyers sidelined by expensive borrowing costs. Still, the housing supply has been slow to build, according to Freddie Mac Chief Economist Sam Khater.
"Rates have declined significantly over the past six weeks, which is helpful for potential homebuyers, but new data indicates homeowners are hesitant to list their homes," Khater said. "Many of those homeowners are carefully weighing their options as more than two-thirds of current homeowners have a fixed mortgage rate of below four percent."
If you are interested in taking advantage of lower mortgage rates, you could consider refinancing your loan to lower your monthly payment. You can visit Credible to find your personalized interest rate without affecting your credit score.
CREDIT CARD BALANCES HIT RECORD HIGH AMID INFLATION: TRANSUNION
Home sales fall, but demand is slowly growing
In November, home sales fell to a seasonally adjusted annual rate of 4.09 million, down 35.4% from the same period last year, according to a report from the National Association of Realtors (NAR).
However, buyers could return to the market as rates drop, the Mortgage Bankers Association (MBA) said. Mortgage applications rose 0.9% from the previous week, according to the MBA's seasonally adjusted index.
The Refinance Index increased by 6% from the previous week, an improvement from previous weeks but still 85% lower than the same week one year ago, according to the MBA.
"The market may be thawing since mortgage rates have fallen for five straight weeks," Lawrence Yun, the NAR's chief economist, said. "The average monthly mortgage payment is now almost $200 less than it was several weeks ago when interest rates reached their peak for this year."
If you are interested in taking advantage of mortgage rates while they are lower, you could consider refinancing your home loan. You can visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
HOME PRICE INCREASES SLOW DOWN, MAY CONTINUE TO WEAKEN: CASE-SHILLER
Here's how buyers can maximize their purchase power
Buyers considering a home purchase in 2023 should know the market where they would like to buy and understand where comparables stand, Josip Rupena, the CEO of financial technology company Milo, said. This is one step buyers can take to find a home in their target price range.
Buyers can also consider these tips if they are looking to optimize their purchasing power:
Get pre-qualified for a mortgage
Rupena said that getting pre-qualified for a mortgage would help buyers understand what they can afford and to better budget for and how it will impact their monthly expenses.
"Doing the research today will help you feel good about the purchase in 2023," Rupena said.
Pad your savings to make a bigger down payment
Maximizing the amount made on a down payment can help lower buyers' finance payments. In a rising rate environment, that is all the more important, according to Michael Gifford, the CEO of financial technology company Splitero.
"Buying a house depends on your financial situation, your wants, and your needs," Gifford said. "With high-interest rates and home prices right now, plus the economic uncertainty, think through long-term scenarios, considering employment status and the property's resale and rental potential."
If you are ready to shop for a mortgage loan, you can use the Credible marketplace to help you easily compare interest rates from multiple mortgage lenders and get prequalified in minutes.