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Mortgage Rates Jump Higher: Freddie Mac
By Leslie Cook MONEY RESEARCH COLLECTIVE
The 30-year fixed-rate mortgage is now averaging 6.42%, according to Freddie Mac.
Mortgage rates moved higher during the last week of the year.
The average rate for a 30-year fixed-rate mortgage increased to 6.42% for the week ending December 29, a change of 0.15 percentage points over the past seven days according to Freddie Mac’s weekly rate data. The 15-year fixed-rate loan ticked lower, coming in at 5.68%.
“The housing market remains in the doldrums with declining sales, inventory and prices,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “The decline in sales and deceleration in homes prices began swiftly earlier in 2022 but have moderated more recently.”
Mortgage rates have increased at a stunning pace for the bulk of 2022, moving from 3.22% during the first week of January to a high of 7.08% in November. Because of this, many potential homebuyers were priced out of the market.
However, rates have fallen lower over the last month and a half. In all, the 30-year rate increased a total of 3.2 percentage points this year.
“While the intensity of weakness is moderating, the market continues to decline and forward leading indicators suggest housing will remain weak throughout the winter,” Khater added.
Pending sales, an indicator of future sales based on signed contracts, decreased by 4% between October and November, and is nearly 38% lower compared to a year ago, according to the National Association of Realtors.
“Pending home sales recorded the second lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” said Lawrence Yun, chief economist at NAR, in a press release.
Mortgage rates move higher to end the year
Mortgage rates moved higher today as markets weighed positive economic news against the Federal Reserve’s stated intent to continue its monetary tightening policy heading into 2023.
On a positive note, the latest data concerning core inflation, which is the Fed’s preferred measure of consumer prices, show price increases slowed between October and November.
Last Friday, the Bureau of Economic Analysis released the Personal Consumption Expenditures (PCE) price index for November, also known as core inflation. The index showed that prices increased by 5.5% year-over-year in November, but are lower than the month before.
Core inflation is based on a survey of what businesses are selling and excludes food and energy prices, which are highly volatile and can see significant and frequent changes. As a result, this metric is considered a more accurate picture of what consumers are paying for goods and services.
Also good news, according to George Ratiu, manager of economic research at Realtor.com, is the fact that the U.S. economy has seen continued strength in the jobs market, as well as an increase in consumer confidence.
On the other hand, the Fed has reiterated its intention to raise the federal funds rate next year in order to bring inflation back under control — even amid signs that consumer prices seem to be cooling.
As a result, Ratiu said in a statement, “corporate executives are feeling more bearish on account of borrowing costs going higher, with the perceived risk of recession rising.”
“Looking toward 2023, we can expect financial market volatility to continue until investors have more clarity about the economy’s direction,” he said.
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Leslie Cook is the Lead Mortgage Reporter covering real estate and mortgages for Money. She started out over 30 years ago as a business reporter with Caribbean Business newspaper in San Juan, Puerto Rico, covering computers, and human resources. Her work has also appeared in Reuters and she graduated Cum Laude from Bryn Mawr College in Pennsylvania with a bacheloru2019s degree in history.