A Drop in the Mortgage Rates
November saw the mortgage rates drop for five weeks in a row when reported. At the end of November, the 30-year fixed-rate dropped to 7.22% according to Freddie Mac.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” said Sam Khater, Freddie Mac’s chief economist.
“The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels,” he said.
Freddie Mac states that the average mortgage rate is based on the mortgage applications received by Freddie Mac. They believe that the rate decline is due to the mortgage rate cycles peaking. These rates have been brought down by the Fed’s historic rate hikes that have been applied the past couple of years.
“While some Federal Reserve policymakers expressed growing confidence that the existing monetary policy is sufficiently restrictive to reduce inflation to the 2% target, others emphasized the potential necessity for additional rate hikes to achieve the target over a reasonable timeframe,” said Jiayi Xu, an economist at Realtor.com.
“The good news for prospective homebuyers is that affordability is expected to turn around in 2024, though at a slower pace, through a combination of lower mortgage rates and lower prices brought about by cooling inflation and a less frenzied housing market,” Xu said.