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Mortgage rates have risen again after a slight decline last week and remain in the mid-6 percent range.
Although interest rates have fallen by about a percentage point since October, they are still well above pandemic-era rates, while house prices continue to rise, adding to the ongoing affordability crisis in the housing market.
A “For Sale” sign hangs in front of a home in San Mateo County, California, on August 22, 2023. (Liu Guanguan/China News Service/VCG via Getty Images / Getty Images)
Freddie Mac's latest primary mortgage market survey, released Thursday, found that the average interest rate for the benchmark 30-year fixed mortgage rose to 6.69% this week, up from 6.60% last week. The popular grade averaged 6.13% a year ago.
Rents fell in December but are still well above pre-pandemic levels
The interest rate on a 15-year fixed-rate mortgage also rose, rising to 5.96% after being at 5.76% last week. A year ago, the interest rate for the 15-year fixed bond averaged 5.17%..
Homes under construction in Sacramento, California, July 3, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Sam Khater, Freddie Mac's chief economist, said in a statement that the stabilization of interest rates has caused some potential homebuyers to “jump off the fence and back into the market.”
Khater added: “Despite ongoing inventory issues, we expect a busier spring home buying season than 2023, with home prices continuing to rise steadily.”
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Buying activity has increased recently despite higher interest rates, but the lack of existing properties on the market is expected to continue to hamper the real estate market this year.
Homes in Rocklin, California, December 6, 2022. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
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“While the softening of mortgage rates may encourage some buyers to re-enter the market, with approximately two-thirds of outstanding mortgages currently having interest rates below 4%, a significant proportion of existing homeowners may choose to postpone their buying and selling plans and wait.” “I wonder if potential customers will get even lower interest rates before making decisions about their next residence,” said Jiayi Xu, an economist at Realtor.com.
“As a result, we expect the housing market to remain subdued in 2024, particularly given existing property sales prices are still rising in December 2023.”