According to Freddie Mac, mortgage rates fell the middle week of January 2023. The 30-year fixed rate was down from 6.33% to 6.15% from the week before. A year ago the 30-year fixed rate was only 3.56%.
“As inflation continues to moderate, mortgage rates declined again this week,” said Sam Khater, Freddie Mac’s chief economist.
“Rates are at their lowest level since September of last year, boosting both homebuyer demand and home builder sentiment. Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern,” he added.
The Federal Reserve was to blame for the spike in interest rates in 2022 because they were trying to tame soaring inflation. The mortgage rates did start to lower in the last couple of months of 2022.
“Although the slower inflation rate in December is a positive sign, concerns from businesses and investors about economic growth continue to rise as weaker retail sales data remind us that the US consumer is not invincible,” said Jiayi Xu, Realtor.com economist.
January 2023 the drop in the 10-year Treasury caused the fixed-mortgage rate to also drop. Mortgage rates usually mirror what the 10-year US Treasure bonds do. The changes in the rates from low to high and high to low have caused a drop in the sale of homes.
“While our 2023 forecast anticipates ongoing inflation causing upward pressure on rates, recent favorable data has helped to pull mortgage rates down,” said Xu. “As the economy weathers the easing in inflation, mortgage rates may continue to fluctuate in the short term, within the 6% to 7% range that we have seen over the past five months.”
The lowering rates are helping with home buyers’ sentiment according to Mortgage Bankers Association. The rates are still close to twice what they were at the same time in 2021.
“For people who are thinking about selling their home, current market conditions may be causing them to hold off,” said Xu. “Recent data show that December home sellers faced more competition from other potential sellers, longer time on market, and a greater likelihood of having to lower their asking price. Some are waiting to see if the market improves before putting their home up for sale.”
