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‘Optimism grows’ as mortgage rates fall for the biggest three weeks since 2008 – but despite this ‘silver lining’, experts still see dark clouds ahead


'Optimism grows' as mortgage rates fall for the biggest three weeks since 2008 - but despite this 'silver lining', experts still see dark clouds ahead

‘Optimism grows’ as mortgage rates fall for the biggest three weeks since 2008 – but despite this ‘silver lining’, experts still see dark clouds ahead

Mortgage rates continued to plunge from a peak of 7.08 percent in November, marking their biggest three-week decline in 14 years.

Mortgage rates continue to fall this week as optimism grows around the prospect that the Federal Reserve will slow the pace of rate hikes. speak Freddie Mac Chief Economist Sam Khater.

That said, mortgage registration activity is down once again, as many homebuyers are still priced out of the market and wary of the volatile economy.

“Even with interest rates falling and home prices softening, economic uncertainty continues to limit homebuyer demand as we enter the final month of the year,” Khater said.

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Mortgage rates this week

30-year fixed-rate mortgage

Freddie Mac reported on Thursday that the average 30-year fixed-rate mortgage fell to 6.49%, down from 6.58% last week. A year ago, the average 30-year rate was 3.11%.

Mortgage rates began to slide below 7% after the most recent inflation data was released in mid-November. The Consumer Price Index came in at 7.7%, below economists’ expectations.

“The data suggests that mortgage rates may have peaked. After breaking through the 7% threshold in the second week of November, interest rates are finally coming down as inflation is cooling down.” write Nadia Evangeliou, senior economist for the National Association of Realtors.

Evangeliou believes interest rates could stabilize at 6% if inflation continues to slow.

15 year fixed rate mortgage

The 15-year average mortgage also fell from 5.90% last week to 5.76% this week. At the same time a year ago, the 15-year interest rate was 2.39%.

But while the drop in skyrocketing mortgage rates may be “good news,” housing costs in 2023 are expected to remain high, warning George Ratiu, director of economic research at Realtor.com.

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Ratiu added: “The good news is that the number of homes for sale continues to grow strongly, even as sellers have taken a step back from the market this fall. “Ready buyers can expect more properties to choose from and a better bargaining position.”

Mortgage giants are raising loan limits in 2023

Federal Housing Finance Agency (FHFA) announced on Tuesday, Fannie Mae and Freddie Mac will increase the limit of a facility-compliant loan (the highest loan amount for single-family properties) to $726,200. This is an increase of $79,000 from $647,200 in 2022.

In more expensive markets, like San Francisco and New York City, the loan cap will run to more than $1 million.

Next year’s increase won’t be as high as the government agency did in 2022, due to slowing house prices. However, some experts remain concerned.

“Ultimately, such support would drive up home prices, exacerbating the affordability challenges we face in today’s supply-constrained market,” said the trade association Association. Housing Policy Council speak in a statement.

Mortgage application rejected again

Despite lower interest rates, mortgage applications fell 0.8 percent from last week, according to the Mortgage Bankers Association (MBA).

“Economics at home and abroad are weakening, which should lead to slower inflation and allow the Fed to slow down the pace of rate hikes,” he said. speak Joel Kan, vice president and chief economist at MBA.

“Buying activity picks up slightly after adjusting for the Thanksgiving holiday, but rate cuts are still not enough to bring about refinancing activity.”

Refinance applications fell another 13% — marking their lowest level since 2000. They were also 86% lower than the same week last year.

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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.

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