The latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday shows the 30-year fixed-rate mortgage (FRM) averaging 6.33%, down from last week’s 6.49%. This is the fourth consecutive week rates have moved downward, Freddie Mac reported.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.33% as of December 8, 2022, down from last week when it averaged 6.49%. A year ago at this time, the 30-year FRM averaged 3.10%.
- 15-year fixed-rate mortgage averaged 5.67%, down from last week when it averaged 5.76%. A year ago at this time, the 15-year FRM averaged 2.38%.
Economists’ Takes:
“Mortgage rates decreased for the fourth consecutive week, due to increasing concerns over lackluster economic growth,” said Sam Khater, Freddie Mac’s chief economist. “Over the last four weeks, mortgage rates have declined three quarters of a point, the largest decline since 2008. While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates.”
MBA President and CEO Bob Broeksmit commented:
“Mortgage applications slowed last week, even as the rate for a 30-year fixed mortgage decreased again and is below 6.5 percent. 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. 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.”
Nadia Evangelou, NAR senior economist and director of real estate research, commented:
“Mortgage rates continue to move down. According to Freddie Mac, the rate on a 30-year fixed mortgage dropped to 6.33% from 6.59% the previous week. Housing affordability rose about 8% in the last four weeks as mortgage rates moved closer to 6%. If inflation continues to slow down, mortgage rates may stabilize near 6% in 2023. With a 6% mortgage rate, housing will become more affordable for many buyers. While the typical family cannot currently afford to buy a median-priced home as the qualifying income exceeds earned income, housing will become affordable again for Americans if rates hover near 6%. In this scenario, the typical family will earn about $1,000 more than the income needed to purchase a mid-priced home. With more buyers back in the market, the housing market may turn around at the beginning of the new year.”
Realtor.com Chief Economist, Danielle Hale commented:
“The Freddie Mac fixed rate for a 30-year loan declined again this week by 16 basis points to 6.33%, as investors watched for more signs of slowing inflation. This week, labor cost data provided a ray of hope as it showed that hourly compensation was lower than previously reported in the second and third quarters for all sectors except manufacturing. And anyone paying attention to the price at the pump would also have noted a decline.
“Next week’s CPI data will confirm whether these trends are pervasive across the variety of goods and services consumers buy. Next week, we’ll also hear from the Fed, which is expected to announce another increase in the Fed Funds rate, but of a slightly smaller size–only 50 basis points compared with the 75 basis points in the previous four meetings. What’s less certain is how the Fed’s projections will have evolved since they were issued in September. 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.
“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. The typical average weekly increase in 2022 has been 17 basis points compared with just 1 to 2 basis points for each previous year dating back to 2004. And this average understates the volatility we’ve seen because there has been so much up and down this year. Looking at absolute weekly changes, the typical difference is 17 basis points in 2022, or 3 to 4 times the size of the average absolute weekly difference going back to 2014. This has made setting a home purchase budget incredibly difficult for home shoppers who have watched their purchasing power swing up and down as rates fluctuate. While recent rate movements have brought the cost of purchasing a home down relative to the recent peak in mortgage rates just one month ago by more than $185, the buyer of a median-price home for-sale today making a 10% down payment is looking at a monthly payment of $2,320 for principal and interest, an increase of more than $880 from last year.
“As housing cost continues to be a major challenge for both buyers and renters alike, affordable midsize housing markets offer a potential refuge that workers with flexible arrangements may continue to seek out. As a result, we expect the top housing markets of 2023 to remain relatively active, even as the number of home sales nationwide is expected to decline,” Hale concluded.
