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Mortgage Rates Inch Higher: Freddie Mac
By Leslie Cook MONEY RESEARCH COLLECTIVE
The 30-year fixed-rate mortgage is now averaging 6.48%, according to Freddie Mac.
Mortgage rates edged higher to start the new year.
According to Freddie Mac’s weekly rate report, the 30-year mortgage is averaging 6.48% for the week ending January 5. The rate increased by 0.06 percentage points compared to a week ago. The average rate on a 15-year fixed-rate loan moved 0.05 percentage points higher to settle in at 5.73%.
“While mortgage market activity has shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023,” said Sam Khater, Freddie Mac’s chief economist, in a statement.
Homebuyers are waiting for mortgage rates to move significantly lower, Khater noted, to jump back into the market. “A strong job market and a large demographic tailwind of millenial renters will provide support to the purchase market,” he added.
The housing market is coming off a tough year in 2022. With rates more than doubling throughout the year, many buyers were priced out of the market. As buyers pulled away, demand slumped.
For the first time in nearly two years, year-over-year home price growth dropped into the single digits, according to CoreLogic’s U.S. Home Price Insights report. Home prices nationally increased by 8.6% in November, the lowest rate of appreciation since November 2020.
CoreLogic expects home prices to continue to decline in 2023, with year-over-year home price growth expected to slow to 2.8% by next November as borrowers contend with a worsening economy and still-stormy housing market.
Nevertheless, as lower mortgage rates lead to increased affordability for potential buyers, the housing market could rebound, said Selma Hepp, deputy chief economist at CoreLogic, in a statement.
Mortgage rates get a sluggish start to 2023
Markets are still caught between the mounting probability of a recession this year, a seemingly resilient jobs market and the hope that the Federal Reserve can avoid a hard landing as it tries to bring inflation back under control.
On Wednesday the U.S. Department of Labor released its Job Openings and Labor Turnover Survey, which showed 10.46 million available job openings, or about 1.7 jobs for every worker actively looking for a job.
Last year, as part of the Fed’s plan to fight inflation, the agency increased the federal funds rate — a move designed to decrease consumer spending and, in turn, lower prices. So far, that plan hasn’t worked.
“With most Americans still employed and seeing modest pay gains, the pullback in spending has yet to meaningfully materialize,” said George Ratiu, manager of economic research at Realtor.com, in a statement. “With more than 10 million open jobs and still not enough applicants to fill them, the labor market would have to experience a sharp and significant drop to move the needle on spending.”
Market analysts are now turning to new unemployment data, set to be released on Friday, and next week’s Consumer Price Index (CPI) to get a better idea of where the economy is heading.
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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.