Good news for homebuyers! Mortgage rates have dropped for the ninth consecutive week, providing a glimmer of hope in a housing market that has been tough on wallets since the 1980s.
After dipping below 7% for the first time since August in early December, rates continued their downward slide. The average 30-year fixed-rate mortgage now stands at 6.61%, down from 6.67% the previous week, according to Freddie Mac data released Thursday. This compares to 6.42% a year ago.
Economists attribute this decline to the anticipation of Federal Reserve rate cuts in 2024. While the Fed doesn’t directly set mortgage rates, its actions influence them significantly. Lower Fed rates often translate to lower mortgage rates.
However, experts say it’s important not to get too excited about the latest data. Realtor.com economist Jiayi Xu warns that holiday fluctuations can make this time of year noisy for mortgage rates.
Looking Ahead to 2024:
- Economists predict further rate drops as the year progresses, potentially fueled by three Fed rate cuts.
- This could continue to ease the burden on homebuyers.
- However, a lack of available homes may keep prices high in the short term.
- Nevertheless, Freddie Mac chief economist Sam Khater expects a “nascent rebound” in the housing market if inflation continues to cool down.
Bottom Line: While the housing market remains complex, the decreasing mortgage rates are a positive sign for potential buyers.