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Mortgage Rates Fell for Fourth Consecutive Week: Freddie Mac
By Leslie Cook MONEY RESEARCH COLLECTIVE
This week saw another drop in mortgage rates. The 30-year fixed-rate mortgage is averaging 6.33% according to Freddie Mac’s weekly report, a decrease of 0.16 percentage points from last week. The 30-year rate has fallen by 0.75 percentage points over the last month, the largest decline in rates since 2008. The average rate on a…
This week saw another drop in mortgage rates.
The 30-year fixed-rate mortgage is averaging 6.33% according to Freddie Mac’s weekly report, a decrease of 0.16 percentage points from last week. The 30-year rate has fallen by 0.75 percentage points over the last month, the largest decline in rates since 2008. The average rate on a 15-year fixed-rate loan was also lower, coming in at 5.67%.
“Mortgage rates have fallen for the fourth consecutive week, due to increasing concerns over lackluster economic growth,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates.”
That could be because mortgage rates have increased at a dizzying pace since the start of the year, rising from an average of 3.22% in the first week of January to a 20-year high of 7.08% in early November. Even with today’s retreat, rates today have nearly doubled in less than a year.
As a result of rapidly rising rates, consumers have lost confidence in the housing market, a major shift from the red-hot market of a few months ago. Exact forecasts differ, but the general consensus is that the current chilly conditions will continue into next year.
According to Fannie Mae’s Home Purchase Sentiment Index for November, only 16% of survey respondents believe it is a good time to buy a home while 79% think it is a bad time for a home purchase. At the same time, 54% of respondents thought it is still a good time to sell while 39% believe it is not the right moment.
“Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” said Doug Duncan, senior vice president and chief economist at Fannie Mae in a statement Wednesday.
Other sections of the report point to a pessimistic outlook on the housing market in general — 62% of respondents think mortgage rates will continue to increase over the next year, while over 60% believe home prices will either stay at their current level or continue to increase.
Mortgage rates continue their downward trend
There are signs that the recent decline in mortgage rates may continue.
Recent news on the economic front this week helped bolster that argument. On Wednesday, the Bureau of Labor Statistics reported that hourly wages for all economic sectors except manufacturing were lower than anticipated. The news is something that could be interpreted as a sign that inflation is easing.
Markets observers are now anxiously awaiting two announcements scheduled for next week. The first is the November Consumer Price Index, to be released on Monday. The hope is that the report will show inflation is in fact easing, which would help allay fears that the economy may slip into a deep recession.
The second is the Federal Reserve’s last Federal Open Market Committee meeting of the year, where it is widely anticipated that policymakers will decide on a 0.50 percentage point increase in the federal funds rate. If the Fed goes through with the expected hike, it would bring the fed fund rate up to 4.5% but it would also be the smallest increase since May.
The federal fund rate is the interest rate banks charge each other to borrow money overnight. By raising the fed funds rate, the Fed encourages lenders to raise rates on all kinds of credit, including mortgages. Rising rates make it more expensive, and less attractive, to borrow money, putting a damper on demand that will eventually result in lower prices.
As always, economists will also be looking for the Fed’s projections on where the economy is heading and indications of future rate increases.
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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.