Mortgage rates are at their lowest point since the end of October, and even though they remain relatively elevated, the drop is moving the purchase market, Freddie Mac said.
The 30-year fixed-rate mortgage averaged 6.69% as of Dec. 5, a drop of 12 basis points from last week's 6.81%. Last week's Primary Mortgage Market Survey release was adjusted for Thanksgiving with the data gathering closing a day earlier.
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Industry mortgage rate forecasts for 2025 range from 6.3% to 6.8%.
Meanwhile, the 15-year FRM averaged 5.96%,
"Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved," Sam Khater, Freddie Mac chief economist, said in a press release. "The responsiveness of prospective homebuyers to even small changes in rates illustrates that affordability headwinds persist."
Redfin's latest Homebuyer Demand Index, released Thursday morning, was up 7% year-over-year, as consumers who waited for the election season to end have come out of the woodwork.
Furthermore, "buyers realized mortgage rates may not drop below 5%, and probably not below 6%, in the near future," Mimi Trieu, a Redfin agent in the Bay Area, said in a press release. "They are also noticing there are not many desirable, move-in ready homes for sale that are priced reasonably, so they're pushing forward and negotiating for good deals."
Zillow's rate tracker found the 30-year FRM at 6.31% as of 11 a.m. on Thursday morning, down 8 basis points from the prior week's average of 6.39%.
Lender Price data on the National Mortgage News website at that same time had the 30-year FRM at 6.864%.
The 10-year Treasury, a benchmark mortgages are priced against, was at 4.2%, up from its Wednesday close of 4.18% but down from the 4.24% it closed at on the day before Thanksgiving.
The real estate company previously predicted for next year that rates will fall, rise and then fall again.
"This week follows the first part of our prediction, as rates fell to the lowest point in six weeks," Kara Ng, senior economist at Zillow Home Loans, in a statement released Wednesday evening. "While we expect mortgage rates to end 2025 lower than today, there's no guarantee if and when rates would reach that forecast."
If anything,
"For home shoppers who have found a home that fits their needs and can afford to finance at today's rates, waiting for rates to fall further can be risky," Ng said. "The next FOMC meeting is on Dec. 18, and it will come with commentary and economic projections that could shift mortgage rates in either direction."
On a seasonally adjusted basis,
"Mortgage applications increased for the fourth straight week, fueled by a 6% jump in purchase activity to a level last seen in January," Bob Broeksmit, MBA president and CEO, said in a Thursday morning statement. "Prospective homebuyers in recent weeks are responding to lower mortgage rates and the continued uptick in housing supply."
The market should be preparing for no more rate cuts starting with that next FOMC meeting, Moody's Banking Industry Practice Lead Chris Stanley said in a statement put out on Tuesday.
"Additional cuts offer relief to banks with unrealized losses on securities portfolios, and underwater [commercial real estate] landlords in need of refinancing," Simon said, adding they should prepare for scenarios that deviate from the current consensus on Fed rate cuts.
"Resilient labor markets and productivity continue to drive economic growth," Simon said. "However, inflation remains above target, with lagged components of consumer prices and core services presenting significant headwinds."
