Mortgage rates stop their decline
Rates have fallen significantly over the past seven weeks.
DeBianchi Real Estate’s Sam DeBianchi discusses mortgage rates and shares her outlook for the housing market into next year.
The average long-term U.S. mortgage rate rose after six weeks of decline.
The 30-year fixed-rate mortgage averaged 6.42%, down from 6.27% last week, according to mortgage buyer Freddie Mac. A year ago, the 30-year FRM averaged 3.11%.
The 15-year fixed-rate mortgage averaged 5.68% down from last week when it averaged 5.69%. A year ago, the 15-year FRM averaged 2.33%.
Rates are coming off their November peak for potential homebuyers, but new data indicates homeowners remain hesitant to list their homes.
The long-term rate reached 7.08% in late October and again in early November as the Federal Reserve has continued to crank up its key lending rate this year in an effort to cool the economy and tame inflation.
Home for sale sign hangs in front of a house in Oakton ,Va., Mar. 27, 2014 (Reuters Photos)
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The big increase in mortgage rates has torpedoed the housing market, with sales of existing homes falling for 10 straight months to the lowest level in more than a decade.
While home prices are now dropping as demand has declined, they are still nearly 11% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable and a much more daunting prospect for many people.
George Ratiu, senior economist at realtor.com, calculates that the monthly payment for a median-priced home is now about $2,100, before taxes and insurance, up more than 60% from a year ago. The median is halfway between the highest and lowest figures.
Construction workers build new homes in Philadelphia, Pa., April 5, 2022. (AP Photo/Matt Rourke)
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Sales of new homes are also falling. Ratiu expects mortgage rates will remain above 6% next year and sales to stay low.
"All of these data are indicative of a market going through a major reset, which is the Fed’s goal," he said.
The Fed has hiked its benchmark interest rate seven times this year to a range of 4.25% to 4.5%, the highest in about 15 years. It has signaled it may raise them another three-quarters of a point next year.
The Associated Press contributed to this report.
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