For the third consecutive week, mortgage rates have fallen. According to Freddie Mac, the 30-year fixed rate mortgage was 6.49% in the week ending December 1, 2022. Last week’s interest rates were 6.58%.
Mortgage rates rose to over 7% last month, but recently they have fallen over half a percentage point.
In March this year, The Federal Reserve began raising its benchmark interest. The Fed issued six increases from March to November and hinted at its plans for one more rate hike during its mid-December meeting.
Current Mortgage Rates
Director of Realtor.com’s director of economic research, George Ratiu, wrote in an emailed statement, “While the Fed indicated at this month’s meeting that it will consider changes in inflation metrics in its rate setting, it also highlighted that it does not expect to back off its hawkish stance on inflation until it sees prices running closer to the desired target of 2%,”
The annual inflation rate for the U.S. is 7.7%, down from 8.2%. Although a decrease in inflation is good news, the current inflation is nowhere near the Fed’s economic goal of at or around 2%.
After mortgage rates rising for nearly a year, the last three weeks have given homebuyers a glimpse of hope.
The Mortgage Bankers Association reports mortgage applications have risen since the rate decline.
What the Experts are Saying
Economists and real estate professionals have varying forecasts of the market.
Bob Broeksmit, President and CEO of the Mortgage Bankers Association, said, “With signs of economic slowing both in the U.S. and globally, mortgage rates will remain volatile but are likely to continue to trend downward,” he said,
On the other hand, Odeta Kushi, deputy chief economist at First American, believes rates will rise.
Kushi said, “The popular 30-year, fixed mortgage rate dipped recently as signs of slowing inflation pushed Treasury yields lower. But, as the San Francisco Federal Reserve Bank President Mary Daly warned, it is far too early for the U.S. central bank to ‘declare victory’ in its fight against inflation, and until inflation is contained, there is upside risk for mortgage rates. . . If inflation expectations are higher than expected or the Fed has to take more drastic actions than markets anticipate to tame inflation, mortgage rates may move up further.”
The Bottom Line
We must wait for the next Consumer Price Index (CPI) report, released by The U.S. Bureau of Labor Statistics, scheduled for December 13th, to see what action the Feds take to continue its fight against inflation.
