Economists discuss potential impact on homebuying activity
US mortgage rates remained virtually unchanged this week as the “market digests” the impact of slowing inflation and potential rate cuts from the Federal Reserve.
The 30-year fixed-rate (FRM) mortgage posted a minor increase to 6.62% as of January 4, according to Freddie Mac. That’s up from 6.61% the previous week and from 6.48% a year ago.
Meanwhile, the 15-year FRM average dipped to 5.89%, down from last week’s 5.93% and higher than the 5.73% average a year ago.
“Between late October and mid-December, the 30-year fixed-rate mortgage plummeted more than a percentage point. However, since then, rates have moved sideways as the market digests incoming economic data,” Freddie Mac chief economist Sam Khater said in the report.
Mortgage rates are likely to trend downward throughout the year, influenced by the Federal Reserve’s anticipated rate cuts and easing inflation, according to Khater. Despite this potential good news for borrowers, Khater pointed out that homebuyers are still facing the persistent issues of scarce inventory and escalating home prices.
“While lower mortgage rates are welcome news, potential homebuyers are still dealing with the dual challenges of low inventory and high home prices that continue to rise,” he said.
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However, Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), remained optimistic, expecting mortgage rates to inch down gradually alongside an increase in available homes.
“MBA expects mortgage rates to continue to decline slowly, which, along with more new and existing housing inventory, should boost homebuying activity in the months ahead,” Broeksmit said.
NerdWallet mortgage expert Holden Lewis agreed: “Mortgage rates are at their lowest levels since last April. January is typically the slowest month of the year in home sales, but today’s mortgage rates might spur some people to go house-shopping now rather than waiting until spring.”
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