The Current Landscape of Mortgage Rates According to Freddie Mac’s Survey

In a recent development in the real estate finance sector, mortgage rates have shown stabilization, consistently remaining in the 6% range. This trend, highlighted in Freddie Mac’s latest Primary Mortgage Market Survey® (PMMS®), is a key indicator of the current state of the housing market. As of January 11, 2024, the 30-year fixed-rate mortgage (FRM) averaged 6.66 percent, reflecting a slight increase from the previous week’s average but maintaining a steady position in the mid-six percent territory.

Analysis of the Current Mortgage Rates

• Recent Stability: For the past three weeks, mortgage rates have shown remarkable stability, hovering in the mid-six percent range. This period of steadiness, while modest, has positively influenced homebuyer demand.
• 30-Year FRM Overview: The 30-year FRM, a common homebuyers’ choice, marked a slight increase from 6.62 percent last week to 6.66 percent. This rate is considerably higher than the 6.33 percent average recorded a year ago.
• 15-Year FRM Trends: The 15-year FRM, often preferred by those looking to refinance, averaged 5.87 percent, slightly down from 5.89 percent the previous week but up from 5.52 percent a year earlier.

The Impact on Homebuyers and the Market

• Affordability Challenges: Sam Khater, Freddie Mac’s Chief Economist, points out that despite the small uptick in demand, affordability continues to be a significant challenge. Home prices are rising more rapidly than incomes, partly due to persistently tight inventory.
• Advice for Potential Buyers: Khater advises potential homebuyers to explore state and local resources, such as down payment assistance programs, which can significantly alleviate the financial burden of closing costs.

Latest Redfin Report Shows: U.S. Housing Market Gains Momentum

The latest report from Redfin, a technology-powered real estate brokerage, indicates a significant shift in the U.S. housing market. Pending home sales have seen their smallest year-over-year drop in two years, decreasing by only 3% in the four weeks leading up to January 7. This trend suggests a more balanced market, prompting advice for house hunters to start making offers now. The market is characterized by lower interest rates, an increase in listings, and relatively low competition, though an uptick in activity could lead to rising prices and more bidding wars.

Further highlighting this shift, mortgage-purchase applications have risen by 3% from a month ago, and Redfin’s Homebuyer Demand Index, which tracks requests for tours and other buying services, is up by 5% in the same period. Redfin agents report an increase in sellers listing properties and more buyers engaging in activities like tours and mortgage applications as rates stabilize in the mid-6% range, a decrease from the 8% seen in October. This has been motivating for buyers, who are now facing lower median housing payments, down $327 (12%) from the peak in October. Sellers are equally motivated by the increased demand and easing of the lock-in effect.

The market is also seeing 9% more new listings compared to a year ago. While the total number of listings has declined by 3% annually, this represents the smallest decline since June, further indicating a shift towards a more active and balanced housing market.