Mortgage rates maintained a downward trajectory last week, dropping for the fourth time in as many weeks following reports that inflation may have reached its peak, according to Freddie Mac.
The average rate for a 30-year fixed-rate mortgage dropped to 6.33% for the week ending Dec. 8, according to Freddie Mac’s Primary Mortgage Market Survey. This was a decrease from the previous week when it averaged 6.49%, yet it remains significantly higher than last year when it was 3.10%.
The 15-year mortgage was 5.67% last week, down from 5.76% the week before and up from 2.38% last year.
Mortgage rates dropped three-quarters of a point in the past four weeks, “the largest decline since 2008,” according to Sam Khater, Freddie Mac’s chief economist.
“Mortgage rates decreased for the fourth consecutive week, due to increasing concerns over lackluster economic growth,” Khater said. “While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates.”
If you are interested in taking advantage of lower mortgage rates, you could consider refinancing your loan to lower your monthly payment. You can visit Credible to find your personalized interest rate without affecting your credit score.
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Mortgage demand remains low, MBA says
Even though mortgage rates fell again, mortgage applications dropped 1.9% last week from the week before, according to the Mortgage Bankers Association’s seasonally adjusted index.
Purchase activity slowed by 3% on a seasonally adjusted basis and was 40% lower than the same week one year ago on an unadjusted basis. Applications to refinance a home loan rose 5% for the week but were still 86% lower than one year ago. And the average size of a loan for purchase applications dropped to $387,300, which is the lowest level since January 2021, the MBA reported.
“Despite the ongoing decline in mortgage rates that started in October, prospective homebuyers continue to delay decisions to purchase homes, even as home prices flatten or fall,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said. “The average loan size for a purchase application last week was at its lowest level in nearly two years, another indication that home prices are cooling.”
If you are interested in taking advantage of mortgage rates while they are lower, you could consider refinancing your home loan. You can visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
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All eyes are on the Fed’s next move
Mortgage rates have mainly dropped based on the belief that inflation may have reached its peak. How the Fed reacts next will determine where rates head in the New Year, according to Danielle Hale, chief economist at Realtor.com.
The Federal Reserve, which will meet one more time this year, has indicated that it will continue to raise rates to reach 2% inflation, but would slow the rate of increases. At its next meeting on Dec. 14, the Fed is expected to raise interest rates by 50 basis points.
What is less clear is “how the Fed’s projections will have evolved since they were issued in September,” Hale said in a statement.
“These projections will show their expectations for economic growth and employment as well as the likely path of the Fed’s policy rate if conditions are consistent with the forecast,” Hale continued. “This means that mortgage rates may continue on the volatile path seen so far in 2022 that has made it very difficult for buyers to set and maintain a home shopping budget.”
If you think you’re ready to shop around for a mortgage loan, you can use the Credible marketplace to help you easily compare interest rates from multiple mortgage lenders and get prequalified in minutes.
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