Sub-7% Mortgage Rate Spurs Positive Outlook

Sub-7% Mortgage Rate Spurs Positive Outlook

It’s a festive early season for the mortgage industry as rates dip below the 7% mark ahead of Jerome Powell’s Federal Reserve announcement. Freddie Mac’s survey clocked the 30-year fixed mortgage rate at 6.95%, down from last week’s 7.03% and up from 6.31% a year ago.

Optimal Blue’s average 30-year fixed rate settled at 6.9%, while Mortgage News Daily reported a remarkable drop to 6.62% for the average 30-year fixed mortgage, the lowest since May and significantly lower than the cycle’s peak at 8.03% in October.

Freddie Mac’s chief economist, Sam Khater, foresees a gradual thawing of the housing market next year, citing decelerating inflation and the Fed’s projected rate cuts in 2024 and 2025.

Loan officers quoted rates in the mid-6% range, with FHA borrowers securing rates as low as 5.7%, signaling increased activity since Thanksgiving, enticing homebuyers with lower rates. Rising new listings also offer hope for buyers, although the majority of existing mortgages with rates under 6% pose a challenge to inventory growth.

Bright MLS Chief Economist Lisa Sturtevant predicts changes in 2024 as life circumstances prompt more homeowners to sell, potentially shaking up the market. Sturtevant expects this bustling December market to spill over into January as buyers and sellers aim to act before the spring rush.

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