February 23, 2024
Mortgage

Mortgage Rates Drop in Early Christmas Gift for Homebuyers


Mortgage rates have tumbled, according to lender Freddie Mac, after weeks of hitting their highest levels since the turn of the century, in a sign that the housing market may be getting some relief following elevated prices accompanied by high rates.

The 30-year fixed mortgage rate hit its lowest point in six months at 6.67 percent while the 15-year fixed mortgage rate crossed under 6 percent at 5.95 for the week ending December 21, data from Freddie Mac showed. The popular 30-year fixed rate had hovered around 7 percent for more than four months.

“The 30-year fixed-rate mortgage remained below seven percent for the second week in a row, a welcome downward trend after 17 consecutive weeks above seven percent,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

Newsweek reached out to Freddie Mac via email on Thursday for comment.

housing market
A home for sale in New York City. Mortgage rates have tumbled below 7 percent, Freddie Mac said on Thursday, encouraging buyers to enter the market.

The fall in rates, which in October hit their peak of 8 percent, is encouraging buyers and sellers to enter the market, attracted by the potential of having lower monthly payments.

Earlier on Thursday, the Mortgage Bankers Association revealed that the national median mortgage payment dropped by nearly 3 percent for November to about $2,140, $62 lower than October.

“Lower rates are bringing potential home buyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects,” Khater said. “A rise in home builder confidence, followed by new home construction reaching its highest level since May, signals a response to meet heightened demand as current inventory remains low.”

Low inventory has kept prices elevated. Analysts said that America’s housing market is about 4 million homes short to meet demand and the competition for houses pushes up prices.

“We’re seeing that new listings, the activity, is kind of holding up though because last year saw such an intense decline and this year new listing activity a little bit more stable,” Hannah Jones, an economic research analyst at realtor.com, told Newsweek on Wednesday.

“New listing activity remains below every other year in our data history, so 2017 to 2021, new listing activity is still below those levels, but it did tick up compared to 2022 in November.”

The existing homes market showed improvement in November, after it was essentially frozen as sellers stayed on the sidelines reluctant to give up the lower rates they secured in years past. That segment of the market registered sales up by nearly 1 percent, breaking five months of negative data, the National Association of Realtors said on Wednesday.

Meanwhile, listings went up in November, according to realtor.com, rising by 7.5 percent for the year. While still lower than 2017 to 2021, it was a positive signal for the market that experts expect will continue over the next year.