Mortgage rates dropped for the fifth consecutive week to entice buyers back, but homes remain in short supply, according to Freddie Mac.
The average 30-year fixed-rate mortgage was 7.22% for the week ending Nov. 30, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s a decrease from the previous week when it averaged 7.29%. A year ago, the 30-year fixed-rate mortgage averaged 6.49%.
The average rate for a 15-year mortgage was 6.56%, down from 6.67% last week and up from 5.76% last year.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” Freddie Mac’s Chief Economist Sam Khater said. “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. The modest uptick in demand over the last month signals that there will likely be more competition in a market that remains starved for inventory.”
Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term, and get preapproved with multiple lenders at once.
Pending Home Sales Slump
Pending home sales dropped 1.5% in October, their lowest level in 20 years, according to the National Association of REALTORS.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” NAR chief economist Lawrence Yun said. “Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied.”
Forecasts for mortgage rates predict a continued drop despite the continued mixed messages from the Fed. Some Federal Reserve policymakers believe that the Fed’s existing monetary policy is sufficiently restrictive to reduce inflation to 2%; others feel that more rate hikes are needed to achieve the target.
Despite the uncertainty, economists at Realtor.com are forecasting that the average mortgage rate will be 6.8% in 2024. According to Realtor.com Economist Jiayi Xu, that does little to incentivize current homeowners holding sub 5% mortgages to re-enter the market, according to Realtor.com Economist, Jiayi Xu.
“As mortgage rates are expected to remain elevated, current homeowners with low mortgage rates are expected to stay put, leading to a decline in for-sale inventory,” Xu said in a statement. “Meanwhile, as affordability remains the top concern in home purchasing, the outlook for home sales in 2024 is projected to remain steady at lower levels.
“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.”
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
New Loan Limits Reflect Rising Home Prices
The Federal Housing Finance Agency’s (FHFA) new conforming loan limits for 2024 mean homebuyers can now get larger mortgages backed by Fannie Mae and Freddie Mac.
The new mortgage limit for conventional loans backed by Fannie and Freddie will be $766,550, an increase of $40,350 from 2023. In high-cost areas where 115% of the local median home value is larger than $766,550, homebuyers will be permitted to use the high-cost area loan limit, which is 150% of typical loan limits. That pushes the new limit for high-cost areas to $1,149,825.
“The new loan limits essentially mean that homeowners who have seen price appreciation can refi into a Fannie or Freddie loan,” Charles Williams, founder and CEO of real estate and mortgage behavioral data provider Percy. “This is good news also for potential homebuyers who want to buy at the higher end of the new limit.”
If you are interested in taking out a mortgage, you can use an online marketplace to compare your options. Visit Credible to compare multiple lenders at once and choose the one with the best option for you.