Mortgage rates have dropped to their lowest level since May 2023, offering a glimmer of hope for aspiring homeowners.
The 30-year fixed-rate mortgage averaged 6.6% as of Jan. 18, according to data released by Freddie Mac
FMCC,
on Thursday.
That’s down 6 basis points from the previous week. One basis point is equal to one hundredth of a percentage point.
A year ago, the 30-year rate was averaging 6.15%.
The average rate on a 15-year mortgage was 5.76%, down from 5.87% last week. The 15-year was at 5.28% a year ago.
Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.
Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging 6.88% as of Thursday afternoon.
What Freddie Mac said: “This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability,” Sam Khater, chief economist at Freddie Mac, said in a statement.
“However, as purchase demand continues to thaw, it will put more pressure on already depleted inventory for sale,” he added.
What are they saying? “On a loan to purchase a $400,000 home, a one percentage point decrease in mortgage rates can lead to a $250 drop in the typical monthly payment,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.
“But we should not expect home prices to stay flat as mortgage rates decline,” she added. “Lower rates in 2024 will lead to more transactions, encouraging both more buyers and sellers to enter the market. But it will continue to be a very competitive market for homebuyers in 2024.”
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