Mortgage rates rose this week after falling for six consecutive weeks

CNN
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Mortgage rates rose this week, their first increase after falling for six straight weeks, according to the latest data from Freddie Mac.

The 30-year fixed rate mortgage averaged 6.42% in the week ending Dec. 29, down from 6.27% the previous week and capping a roller coaster year for homebuyers who have seen mortgage rates more than double in less than 12 months.

“The housing market remains in the doldrums with falling sales, inventories and prices,” said Sam Khater, chief economist at Freddie Mac.

“The decline in sales and the deceleration in house prices started quickly in early 2022, but have moderated more recently. As the intensity of the weakness moderates, the market continues to decline and leading indicators suggest housing will remain weak through the winter,” he added.

A year ago, the 30-year fixed rate was 3.11% – and few expected rates of 6% to be a relief, after falling more than 7%. Home buyers have seen their buying power evaporate, with higher rates adding hundreds of dollars to what they would pay each month.

Mortgage rates have risen for most of 2022 amid the Federal Reserve’s unprecedented campaign of severe interest rate hikes aimed at reining in soaring inflation. But mortgage rates have fallen in recent weeks, following various data points showing that inflation may finally have peaked.

« Freddie Mac’s fixed rate for a 30-year loan followed in the footsteps of the 10-year Treasury, which rose from 3.45% mid-month to 3.86% yesterday, » said George Ratiu, senior economist and Director of Economic Affairs. search on Realtor.com.

« With an eye on the new year, investors are comparing this month’s positive economic data with the Federal Reserve’s continued monetary tightening, » he added. “On the one hand, third-quarter gross domestic product was revised up twice, the labor market remains strong, inflation has moderated and consumer confidence hit an eight-year high. month. On the other hand, corporate executives feel more bearish due to higher borrowing costs as the perceived risk of recession increases. Worries about the business outlook could prompt more business leaders to freeze hiring or resort to bigger layoffs in 2023.”

The average mortgage rate is based on the mortgage applications Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers who have a 20% down payment and have excellent credit. Many buyers who put less money up front or have less than perfect credit will pay more than the average rate.