Mortgage rates continued to inch higher for the second consecutive week, while applications for these loans plunged to the lowest level since 1995. Freddie Mac’s latest Primary Mortgage Market Survey revealed that rates for the 30-year fixed note rose from 6.42% last week to 6.48%. While this rate, which is nearly double what it was at this time last year (3.22%), can be a bit of a burden on borrowers, inflationary pressures are easing. They could result in lower mortgage rates later this year, according to Freddie Mac Chief Economist Sam Khater.
The 15-year fixed rate also increased slightly, moving up from 5.68% the previous week to 5.73%. This rate is more than double its average of 2.43% at this point in last year. Meanwhile, applications for mortgages dropped by 4% compared with the previous week and by 48% compared with last year’s levels.
George Ratiu of Realtor.com noted that although November saw home prices decline from their summer peak, they were still above last year’s figures in 79 of the 150 largest metro areas in America – an indication that markets are cooling down as high mortgage rates continue to make buying a home difficult for many prospective buyers.
Ratiu added that due to current mortgage rates hovering near 6.4%, a median-priced home would require monthly payments that are roughly 60% higher than those needed at this time last year – making homeownership unrealistic for many would-be buyers until at least the early spring months when market conditions may become clearer and more favorable toward potential buyers across America.
The Federal Reserve has already raised interest rates seven times over the past year in an attempt to curb inflation, and more raises could occur later this year. Their next meeting will take place on January 25th and 26th of this year.
With long-term mortgage rates continuing to rise, it remains uncertain whether homebuyers will benefit from any significant relief during 2023 or if they’ll have no choice but to contend with recent high costs for some time yet – leaving uncertainty about future housing market activity till further.
