Housing News

A Holiday Gift: Mortgage Rates Keep Falling

If you’re among the millions who could save money by refinancing their home loan or are considering buying a home, then you just received a holiday gift.

Mortgage interest rates fell again to an average 6.19% for 30-year, fixed-rate loans in the week ending Dec. 4, according to Freddie Mac data. That was down from 6.23% in the previous week and 6.69% a year ago.

It’s also barely above the lowest level of the year, which happened at the end of October when rates were 6.17%.

“Mortgage rates decreased for the second straight week as we emerged from the Thanksgiving holiday,” said Freddie Mac Chief Economist Sam Khater in a statement. “Compared to this time last year, mortgage rates are half a percent lower, creating a more favorable environment for homebuyers and homeowners.”

Lower interest rates have the potential to lower monthly housing payments for homebuyers and homeowners alike.

Bright MLS Chief Economist Lisa Sturtevant said in a statement that the decline in interest rates is driving more people to buy a home. The multiple listing service covers the mid-Atlantic region.

But Sturtevant noted that there may be others waiting to see if interest rates fall even further as the U.S. Federal Reserve is set to meet later this month.

“There is a lot of uncertainty about where rates might be headed over the coming months,” Sturtevant said. “It is not at all uncertain that there will be another rate cut.”

Mortgage rates are not tied directly to the Fed’s benchmark rate. But when the market expects the Fed to cut its rates, mortgage rates tend to move down.

Sturtevant cautions that even if the Fed cuts its rate after its December meeting, mortgage rates may not drop.

“My expectation is that the Fed will cut the federal funds rate by a quarter of a percentage point at next week’s meeting,” Sturtevant said. “[However,] average mortgage rates will stay about where they are through the end of the year.”