Despite the U.S. Federal Reserve's decision to keep interest rates unchanged for now and the possibility of future cuts, mortgage rates remained relatively unchanged in the most recent week. While there is hope that interest rates will be reduced in May, mortgage rates are only slightly affected by the Fed's actions. The economy continues to demonstrate its strength, as evidenced by a robust jobs report in January.
Forecasters predict that rates will decrease to around 6% by the end of 2024.
According to data released by Freddie Mac, the average rate for a 30-year fixed-rate mortgage was 6.64% as of February 8. This represents a minimal increase of 1 basis point from the previous week. To provide perspective, one basis point is equal to one hundredth of a percentage point. In comparison, a year ago, the average rate for a 30-year fixed-rate mortgage was 6.12%.
The average rate for a 15-year mortgage, on the other hand, decreased from 5.94% to 5.9% in the latest week. This shows a further decline when compared to the 5.25% recorded a year ago.
Freddie Mac compiles its weekly report on mortgage rates based on thousands of applications from lenders across the country. These applications are submitted to Freddie Mac when a borrower applies for a mortgage.
Additional data from Mortgage News Daily reveals that, as of Thursday afternoon, the average rate for a 30-year fixed-rate mortgage was slightly higher at 6.95%.
Freddie Mac's chief economist, Sam Khater, acknowledged that affordability remains an ongoing challenge in the housing market. This is due to high home prices, elevated mortgage rates, and a low supply of homes, especially for first-time and low-income homebuyers.
Lisa Sturtevant, chief economist at Bright MLS, expressed concerns that homebuyers may feel disappointed with the lack of significant reductions in mortgage rates promised for 2024. Sturtevant attributed the absence of early 2024 rate drops to economic uncertainty and uncertainty about the timing of the Fed's rate cuts. However, she advised buyers to expect lower mortgage rates as they progress through the year.