For the first time since late summer,
The Freddie Mac Primary Mortgage Market Survey for Dec. 14 is down 8 basis points from the prior week, to 6.95% from 7.03%. The last time
A
However, the shorter term 15-year FRM increased nine basis points from the week of Dec. 7, to 6.38% from 6.29%. For the same week in 2022, it averaged 5.54%.
"Potential homebuyers received welcome news this week as mortgage rates dropped below 7% for the first time since August," said Sam Khater, Freddie Mac's chief economist, in a press release. "Given inflation continues to decelerate and the Federal Reserve Board's current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year."
The 10-year yield opened trading on Wednesday, prior to the FOMC announcement at 4.19%; by noon on Thursday, it was already down to 3.9%. Until Thursday morning, the yield was not under 4% since Aug. 9.
Zillow's rate tracker was at 6.38% on Thursday morning, down 8 basis points from Wednesday's 6.46%. This was down 27 basis points from last week's average of 6.65%.
"So long as core inflation and economic activity continues to moderate, mortgage rates may finally start to level off," said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a Wednesday night statement. "While mortgage rates are still higher than they were a year ago, the recent decline is welcome relief for prospective home buyers who witnessed 23-year highs and record-high mortgage costs in October."
A policy pivot by the Fed was made likely to prevent U.S. monetary policy from becoming so restrictive that it creates an economic downturn.
That being said, "market participants and the Fed will be looking for more disinflation in the new year," Divounguy said. "Otherwise, Treasury yields could surge back up, pulling mortgage rates up with them."
