Mortgage rates are (finally) back at 7%

Mortgage rates continued their downward trajectory this week as the 10-year Treasury yield dropped below 4.2% for the first time since September, according to new data from Freddie Mac.

The 30-year, fixed mortgage rate averaged 7.03% for the week ending Dec. 7, according to Freddie Mac‘s Primary Mortgage Market Survey. That’s down significantly from last week’s 7.22% and up from 6.33% the same week a year ago.

Meanwhile, HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate on conventional loans at 6.96% on Thursday.

The 30-year, fixed-rate mortgage fell by almost 80 basis points in six weeks, Sam Khater, Freddie Mac’s chief economist, said in a statement.

He noted that while the drop in mortgage rates initially prompted an uptick in mortgage demand, it’s not enough to attract more homebuyers to the housing market. 

“Although these lower rates remain a welcome relief, it is clear they will have to further drop to more consistently reinvigorate demand,” Khater added.

Meanwhile, investors continue to be confident in the fact that the Federal Reserve is done with its rate hikes, especially after the release of cooler October job openings data on Tuesday.

Realtor.com Economist Jiayi Xu predicts that sustained improvement in inflation will bring average mortgage rates down to 6.5% by the end of 2024.

Markets in Northeast, Midwest will perform well in 2024

According to Realtor.com’s Top Housing Markets for 2024, the Northeast and Midwest markets will stand out thanks to their affordability, high quality of life and strong job markets. Declining interest rates will also breathe some life back into Southern California housing markets next year with an anticipated rebound.