Mortgage rates, especially for the 30-year fixed term, dropped to the lowest levels recorded since early August.
Mortgage rates for the 30-year term are now half a percentage point down from their November average, plunging to 6.67% on Tuesday, per Business Insider. The dip comes after the average rate on the 30-year term hit 8% in October, the highest level recorded since 2007.
Mortgage rates for the 15-year fixed term also fell to 5.96% Tuesday. The 15-year mortgage rate surged to a 7.59% peak in October, its highest average in nearly 23 years.
Mortgage payments are currently down by more than $150 as rates drop for the fifth consecutive week, per a report from real estate firm Redfin. The typical monthly mortgage payment also fell to $2,575 from $2,739.
"Declining rates, along with a sizable year-over-year increase in new listings, are leading to more favorable conditions for some buyers. My advice for serious homebuyers is to compare housing costs to recent highs instead of long-ago lows," Redfin Economics Research Lead Chen Zhao said in the report.
"Housing costs are at their lowest level in three months and it's unlikely they will drop significantly anytime soon. That makes it a relatively good time to lock in a rate," she added.
Will Mortgage Rates Keep Falling?
Mortgage rates are expected to decline in the New Year and fall gradually to 6.9% for the 30-year term in 2025, according to the latest economic forecast report by government-sponsored mortgage firm Fannie Mae.
"Our interest rate forecast is higher this month, with the average FRM30 rate now predicted to average 7.7 percent over the fourth quarter of 2023. We expect the FRM30 rate to average 7.3 percent in 2024 and 6.9 percent in 2025," the report read.
The mortgage firm said it expects home prices to recover by 2025 amid a slow decline in mortgage rates. Home sales are also forecasted to end this year at 4.8 million, end 2024 at 4.7 million, and jump in 2025 to 5.3 million.
Apart from a rebound in the housing market, mortgage originations are also expected to grow to $2.2 trillion in 2025 from $1.5 trillion in 2023.
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