The average interest rate of a U.S. mortgage loan rose for the week ending December 19, 2024, after declining for three consecutive weeks, according to Freddie Mac's weekly Primary Mortgage Market Survey.
"This week, mortgage rates crept up to a similar average as this time in 2023," Freddie Mac's Chief Economist Sam Khater said. A year ago, the 30-year note averaged 6.67 percent.
"For the most part, mortgage rates have moved between 6 and 7 percent over the last 12 months," Khater added. "Homebuyers are slowly digesting these higher rates and are gradually willing to move forward with buying a home, resulting in additional purchase activity."
Commenting on an increase in U.S. existing home sales, National Association of Realtors Chief Economist Lawrence Yun said, "Home sales momentum is building. More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6 percent and 7 percent." Consumers getting used to higher rates certainly does not address an ongoing affordability problem caused partly by low inventory.
Real Boston, on Substack, reported on some mortgage interest rate predictions. Television personality and real estate mogul Barbara Corcoran recently told Fox Business host Neil Cavuto last week that she believed mortgage rates in the 5 percent range would substantially increase homebuying activity, Realtor.com reported. Compass CEO Robert Reffkin told CNBC on Wednesday, December 18, 2024, that his company expected interest rates in the 6 percent range over the next two years.
Freddie Mac also reported an uptick in the 15-year fixed-rate mortgage loan, rising from 5.84 percent to 5.92 percent. During the same week last year, the 15-year note averaged 5.95 percent.
The recent rise in interest rates resulted in a decline in mortgage applications for the first time in five weeks, the Mortgage Bankers Association reported on December 18, 2024. "Mortgage rates increased last week, leading to overall mortgage application activity decreasing for the first time in five weeks," said Joel Kan, MBA's Vice President and Deputy Chief Economist.
Supporting Yun's contention that home buyers are getting used to rates in the 6 percent range, Kan added, "Buyers remained active in the purchase market, helped by gradually improving inventory conditions and a more positive outlook on the economy and job market." Purchase applications were up 6 percent compared to last year.