Mortgage Rates Tick Down As February Begins
Still hovering in the mid-sixes, the 30-year fixed-rate mortgage (FRM) ticked down The week, averaging 6.63%, down from the previous week’s 6.66%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
The week’s numbers:
- The 30-year FRM averaged 6.63% as of February 1, 2024, down from the previous week when it averaged 6.69%. A year ago at this time, the 30-year FRM averaged 6.09%.
- The 15-year FRM averaged 5.94%, down from the previous week when it averaged 5.96%. A year ago at this time, the 15-year FRM averaged 5.14%.
What the experts are saying:
“Although affordability continues to impact homeownership, the combination of a solid economy, strong demographics and lower mortgage rates are setting the stage for a more robust housing market,” said Sam Khater, Freddie Mac’s chief economist.
Khater elaborated, “Mortgage rates have been stable for nearly two months, but with continued deceleration in inflation we expect rates to decline further. The economy continues to outperform due to solid job and income growth, while household formation is increasing at rates above pre-pandemic levels. These favorable factors should provide strong fundamental support to the market in the months ahead.”
Realtor.com Economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage dropped by 0.06 percentage points to 6.63% The week. The Fed has made progress in bringing inflation back toward its 2% target, and many of its members project that policy rate cuts may be appropriate at some point in 2024. However, the central bank left its rate unchanged during its January FOMC meeting as any premature rate cut could pose a dangerous risk of inflation rebounding. In other words, the persistently high-rate environment will continue to affect all parts of the economy, and more evidence is needed before making any next-stage movements. Meanwhile, in addition to the recent massive layoffs in tech sectors, substantial workforce reductions are beginning to surface in the traditional sector The week, suggesting that the job market is undergoing further cooling. Therefore, it will be interesting to see whether the upcoming January jobs report, scheduled for release on Friday, contains any preliminary indications of a slowing labor market.
“With a decline of over one percentage point in mortgage rates from their recent peak, there has been a positive uptick in home buyers’ and sellers’ activities. The surge in pending home sales and new home sales, both determined by contract signings in the early stages of the buying process, indicates increased participation from buyers in the market. Simultaneously, the recent rise in listing activity suggests that sellers are closely monitoring mortgage rates and adjusting their selling strategies accordingly. Despite the promising increase in listing activity, inventory is likely to remain low as sellers may not respond as swiftly as anticipated. In other words, a more substantial improvement in mortgage rates is necessary to attract more sellers to the market. If for-sale inventory fails to meet the demand from buyers, there is a possibility that prices may start to climb once again, contributing to the persistence of higher home prices.
Michael Kogler, REALTOR
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Long & Foster Real Estate | Luxury Portfolio International
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