Freddie Mac reported Thursday that mortgage rates fell below 7% for the first time since August, reaching 6.95% this week. This is a holiday gift to homebuyers who have held off on buying a home in recent months due to rising borrowing costs.
With recent interest rate reductions, the monthly mortgage payment on a $400,000 home is now $2,118. That's $183 less per month than earlier this fall, when interest rates soared to her 7.79%, says Jessica Lautz, deputy chief economist at the National Association of Realtors®. Economists expect interest rates to fall further into the new year.
Adding to the optimism, the Federal Reserve on Wednesday decided to keep its benchmark interest rate unchanged and said three rate cuts are likely in 2024. The possibility of rate cuts in the new year provides hope for pressure on other interest rates, including long-term mortgages. Rates are moderated. NAR projects that mortgage interest rates will average 6.3% in 2024.
As interest rates fall, “momentum is moving in the right direction for stronger sales activity in 2024,” Lautz says. “Will we have a traditional spring real estate market, or will it start to heat up in the winter with lower interest rates?” Also, lower mortgage rates are driving home construction as inventory is needed as buyers move off the sidelines. We hope that this will lead to increased activity among businesses. ”
Freddie Mac reports the national average mortgage rates for the week ending December 14th:
- 30 year fixed rate mortgage: The average was 6.95%, down from last week's average of 7.03%. A year ago, the average 30-year interest rate was 6.31%.
- 15 year fixed rate mortgage: It averaged 6.38%, up from last week's average of 6.29%. At this time last year, 15-year interest rates averaged 5.54%.
