Mortgage rates rose this week, their first rise after falling for six straight weeks, according to the latest data from Freddie Mac. (Natalie Behring, Bloomberg/Getty Images)
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WASHINGTON — Mortgage rates rose this week, their first rise after falling for six straight weeks, according to the latest data from Freddie Mac.
The 30-year fixed-rate mortgage averaged 6.42% for the week ended December 29, up from 6.27% the week before, capping a roller-coaster year for homebuyers that saw mortgage rates rise in less than 12 months as doubled.
“The housing market remains in the doldrums with declining sales, inventories and prices,” said Sam Khater, Freddie Mac’s chief economist.
“The decline in sales and the slowdown in home prices began rapidly earlier in 2022 but have moderated recently. As the intensity of the weakness fades, the market continues to decline and forward-looking indicators suggest housing construction will remain weak throughout the winter,” he added.
A year ago, the 30-year fixed rate was 3.11% – and few predicted interest rates of 6% would provide relief after falling from over 7%. Home shoppers have seen their purchasing power dwindle as higher rates add hundreds of dollars to what they would pay each month.
Has inflation finally peaked?
Mortgage rates rose for most of 2022 amid the Federal Reserve’s unprecedented campaign of harsh rate hikes aimed at taming rising inflation. But mortgage rates have fallen in recent weeks after various data points suggested inflation may have finally peaked.
“Freddie Mac’s fixed rate on a 30-year loan followed in the footsteps of the 10-year Treasury, which rose to 3.86% yesterday from 3.45% mid-month,” said George Ratiu, senior economist and manager of economics Research at Realtor.com.
“As we head into the new year, investors are weighing this month’s positive economic data against the US Federal Reserve’s continued monetary tightening,” he added. “On the one hand, gross domestic product for the third quarter was revised up twice, the job market remains on solid footing, inflation has eased and consumer confidence is at its highest level in eight months.
On the other hand, higher borrowing costs have made business leaders more pessimistic as the perceived risk of a recession increases. Concerns about the business outlook could prompt more business leaders to freeze hiring or resort to broader layoffs in 2023.”
The average mortgage rate is based on mortgage applications Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers who are paying back 20% and have excellent credit ratings. Many buyers who invest less upfront or have less than perfect credit pay more than the average rate.
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