Mortgage rates drop again, creating opportunity for homebuyers: Freddie Mac

Mortgage rates dropped back down again last week and even though it was slight, the decrease had an impact on homebuyer demand, according to Freddie Mac.

The average rate for a 30-year fixed-rate mortgage fell to 6.33% for the week ending Jan. 12, according to Freddie Mac's Primary Mortgage Market Survey. This was a decrease from the previous week when it averaged 6.48% but remains significantly higher than last year when it was 3.45%.

The average rate for a 15-year mortgage was 5.52% last week, down from 5.73% the week before and up from 2.62% last year.  

Mortgage rates have fluctuated in the 6% to 7% range since September, Freddie Mac's data shows. Even though the changes are incremental from week-to-week, the changes are impacting purchase demand, according to Freddie Mac Chief Economist Sam Khater. 

"While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates," Khater said in a statement. "Over the last few weeks, latent demand has been on display with buyers jumping in and out of the market as rates move."

Those small shifts could create savings for borrowers who shop for the best deal, according to Realtor.com Senior Economist George Ratiu.

"For buyers who find a home to purchase, shopping for a mortgage with multiple lenders to secure the lowest rate and fees could result not only in a lower monthly payment, but also in tens of thousands of dollars saved over the life of the loan," Ratiu said in a statement.  

If you are looking to take advantage of lower mortgage rates by refinancing your loan or are ready to shop for the best rate on a mortgage loan, consider visiting an online mortgage broker like Credible to compare rates, choose your loan term, and get preapproved with multiple lenders at once.

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As inflation cools, the housing market faces other challenges

The latest inflation figures could tip the Federal Reserve to adopt less restrictive interest rate increases as the year advances. Still, the mortgage rates and buyers face other challenges, according to Ratiu.

The Consumer Price Index (CPI), a measure of inflation, rose 6.5% year-over-year in December, a slowdown from the 7.1% increase in November. On a monthly basis, inflation fell 0.1% after increasing by that same amount in November, the BLS said. And while the drop is encouraging, there is evidence that consumers are increasingly borrowing money to make ends meet.

"The latest data on consumer credit show a 7.1% yearly increase, on the strength of credit card borrowing," Ratiu said. "Rising prices and lower savings are pushing many consumers to borrow more for everyday needs.

"With capital market volatility expected to continue, mortgage rates will maintain a seesaw trajectory over the short term, likely staying within the 6% to 7% range we have seen over the past five months," Ratiu continued.

If you are ready to shop for a mortgage loan or are considering refinancing your loan to take advantage of lower mortgage rates, you can use the Credible marketplace to help you compare interest rates from multiple mortgage lenders and get prequalified in minutes.

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Buyers can find the best bargains in pandemic hot housing markets, report says

Buyers looking to find the best bargains are more likely to find them in markets that proliferated during the pandemic, which are west of the Mississippi, according to fintech company Knock's buyer-seller market index. 

The index predicts that by the end of this year, 36 markets will be favorable to buyers, 41 to sellers and 23 will be neutral. That compares to November when there were 14 buyers' markets, 46 sellers' markets and 40 neutral markets. 

"With home prices and interest rates cutting into purchasing power, the relocation hotspots where prices grew quickly during the pandemic will increasingly favor buyers in 2023, while more mid-sized markets offering good job opportunities and affordable housing will be the top performing real estate markets in 2023," Knock Cofounder and CEO Sean Black said in a statement. "This will usher in a more balanced housing market. 

"However, home shoppers will find different scenarios depending where in the U.S. they are looking," Black continued.

If you are ready to shop for a mortgage loan, you can use the Credible marketplace to compare rates and lenders and get a mortgage preapproval letter in minutes. 

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