Mortgage rate forecast for next week (Dec. 9-13)
December opened with welcomed news for borrowers: a big dip in mortgage rates.
The average 30-year fixed rate mortgage (FRM) dropped to 6.69% on Dec. 5 from 6.81% on Nov. 27, according to Freddie Mac.
“This week, mortgage rates decreased to their lowest level in over a month. Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved. The responsiveness of prospective home buyers to even small changes in rates illustrates that affordability headwinds persist,” said Sam Khater, chief economist at Freddie Mac.
Will mortgage rates go down in December?
“Treasury yields have also climbed in response to market expectations of inflationary pressures tied to the incoming administration’s proposed policies, such as tariffs and tax cuts, even though these measures have yet to take effect, putting additional upward pressure on mortgage rates.”
-Sam Williamson, senior economist at First American
Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% and as high as 7.79%, according to Freddie Mac. That range narrowed in 2024, with a spread of 6.08% to 7.22%.
With the economy possibly heading into a recession, we may have already seen the peak of this rate cycle. But if inflation rises, mortgage rates could uptrend. Of course, interest rates are driven by many factors and notoriously volatile, so they could change direction any given week.
Experts from CoreLogic, Home Qualified, First American, Realtor.com, and CJ Patrick weigh in on whether 30-year mortgage rates will climb, fall, or level off in December.
Expert mortgage rate predictions for December
Molly Boesel, principal economist at CoreLogic
Prediction: Rates will moderate
“While the Federal Reserve once again cut the federal funds rate, longer-term interest rates had already adjusted for the cut and mortgage rates stayed in the high-6% range for most of November. There is little to suggest that mortgage rates will decrease by much in the coming weeks, therefore look for the 30-year mortgage rate to run in the high-6% range for the rest of the year.”
Ralph DiBugnara, president at Home Qualified
Prediction: Rates will decline
“Mortgage rates have spiked post-election mostly based around the unknown of a new administration and inflation numbers creeping back up. I believe to end the year we will see a decrease in home sales and consumer spending compared to previous years. This combined with a seasonal slow down may change investor and consumer sentiment which will ultimately lower rates slightly on average from November.”
Danielle Hale, chief economist at Realtor.com
Prediction: Rates will moderate
“Mortgage rates are going to be data dependent in December. Recent inflation data has surprised to the high side, and while October hiring was lackluster, extenuating circumstances from strikes to hurricanes likely impacted the numbers. An additional pickup in inflation or stronger labor market data is likely to push mortgage rates higher even if it doesn’t cause the Fed to forego another rate cut. On the flip side, more modest readings on inflation or the labor market could help soften longer-term rates, including for mortgages.”
Rick Sharga, CEO at CJ Patrick Company
Prediction: Rates will moderate
“It seems likely that rates on 30-year mortgage loans will end the year slightly higher than they were in December of 2023 when rates were at roughly 6.6%-6.7%. Inflated yields on the 10-year Treasury bonds are the culprit. Those yields rose due to unexpectedly strong economic reports recently, and will probably stay somewhat elevated due to concerns that some of the economic policies President-elect Trump advocated during the campaign may be inflationary, or add to the country’s already-record $35 trillion debt. Markets hate uncertainty, and that uncertainty will probably keep rates right around 7% for the balance of the year.”
Sam Williamson, senior economist at First American
Prediction: Rates will moderate
“Investors are split on the likelihood of another 25-basis point cut in December, following recent comments made by Federal Reserve Chair Jerome Powell suggesting that the central bank is not rushing to lower rates. This uncertainty poses upside risks on Treasury yields and, consequently, mortgage rates, in the near term. Treasury yields have also climbed in response to market expectations of inflationary pressures tied to the incoming administration’s proposed policies, such as tariffs and tax cuts, even though these measures have yet to take effect, putting additional upward pressure on mortgage rates.
“Mortgage rates are not expected to drift much lower in December than where they are today. However, rates could drop if data shows a sudden economic slowdown or labor market deterioration. Conversely, rates could rise further if the economy outperforms expectations or inflation comes in hotter than expected. Despite short-term headwinds putting upward pressure on mortgage rates, we still anticipate a downward trend toward in 2025 if the labor market continues to soften and inflation slows, despite some expected volatility along the way.”
Mortgage interest rates forecast next 90 days
As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.
With inflation gradually cooling, the Fed adjusted its policies with skipped hikes a cut in September and more expected going forward. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2024.
Current mortgage interest rate trends
Mortgage rates fell to their lowest level since October this week.
The average 30-year fixed rate decreased to 6.69% on Dec. 5 from 6.81% on Nov. 27. Meanwhile, the average 15-year fixed mortgage rate fell to 5.96% from 6.10%.
After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024. Whatever happens, interest rates are still below historical averages.
Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.
Just make sure you shop around to find the best lender and lowest rate for your unique situation.
Shopping around isn’t only for the holidays
Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.
Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.
“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.
As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.
How to shop for interest rates
Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.
The rate lenders actually offer depends on:
- Your credit score and credit history
- Your personal finances
- Your down payment (if buying a home)
- Your home equity (if refinancing)
- Your loan-to-value ratio (LTV)
- Your debt-to-income ratio (DTI)
To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.
You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.
This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.
Source: themortgagereports.com ~ By: Paul Centopani ~ Image: Canva Pro
