Mortgage Rates Hit Lowest Level Since June
The rate on the 30-year fixed mortgage declined to 6.67% from 6.95% the week prior, according. Rates fell for the eighth consecutive week and hit the lowest level since June. The decline is a departure from recent months when rates surged over 7% to the highest level in 23 years. Rates have since scaled back over a full point since peaking in October when they hit 7.79%. It also comes as signs of cooling inflation solidified the Federal Reserve’s decision to hold its benchmark rate steady last week while indicating up to three possible rate cuts in 2024. While welcome news for some homebuyers, lower mortgage rates won’t be enough to mend affordability challenges plaguing most Americans. They have, however, rekindled some refinance activity. The volume of applications to purchase a home fell 1% for the week ending Dec. 15, according to the Mortgage Bankers Association (MBA). Overall, purchase activity was 18% lower than the same period last year. And though sales of previously owned homes increased by 0.8% in November, a separate indicator by the National Association of Realtors (NAR) found the low level of transaction activity was still at a "cyclical low point." November sales were down 7.3% year over year. Applications to refinance a home loan dropped 2% for the week ending Dec. 15 after climbing 19% the week prior, with overall refi activity 8% higher than the same week a year earlier. As rates have trended lower, homebuyer affordability has shown modest signs of improvement. Still, it's nowhere near enough to make buyers rush back to the market. In November, the national median payment for purchase applicants decreased to $2,137, down $62 from October. Still, that figure is up $160 from one year ago, equal to an 8.1% increase. The national median mortgage payment for conventional loan applicants was $2,137, down from $2,208 in October — and up from $1,994 last year. Lower mortgage rates don't fix all the troubles in the housing market. While they do help with affordability, they do little to increase the number of homes for sale in the market (which has throttled sales activity despite high financing costs), and the increase in buyer demand that lower rates may bring at the margins will likely serve to press home prices higher. According to Realtor.com, inventory in November increased 2.4% from the previous month but remained 37.8% below typical 2017 and 2019 levels.