Mortgage rates in the United States dropped to 6.67% in the week ending Dec. 21, marking the lowest level recorded since June.
The 30-year fixed-rate mortgage term fell to 6.67%, according to data released by Freddie Mac on Thursday. The mortgage rate dipped 0.28 percentage points from 6.95% the previous week. This marked the second consecutive week that the 30-year mortgage rate remained below 7%. It is also the lowest 30-year rate recorded since June of this year.
In addition, the mortgage rate for 15-year fixed terms also dropped 0.43 percentage points from 6.38% to 5.95% in the week ending Dec. 21.
It is important to note that Freddie Mac's average mortgage rates are based on mortgage applications it receives from thousands of lenders across the U.S. A homebuyer's rate may be different than reported.
Will mortgage rates continue falling?
The falling mortgage rates come after the average rate rose above 7% in mid-August and surpassed 8% in October. Mortgage rates are expected to continue falling after the Fed signaled in its most recent meeting that rate cuts may be coming next year.
The average rate on a fixed-rate term is predicted to fall to 6.5% by mid-year in 2024 and decline to 6.2% by the end of next year, according to CNN Business, citing projections from Bright MLS.
How will falling mortgage rates influence home prices?
Lower mortgage rates will improve the affordability of homes. For instance, a buyer with a 75% mortgage rate will pay $3,000 monthly on a loan for a $400,000 home. The monthly payments will drop to $2,700 for a buyer with a mortgage rate of 6.2%.
That being said, home prices are unlikely to budge due to a lack of inventory in the market, which continues to keep prices high. Additionally, only 15.5% of homes for sale in 2023 were affordable for the typical U.S. household-the lowest level on record, as reported by real estate brokerage Redfin. That's down 20.7% in 2022 and down by over 40% before the COVID-19 pandemic.
The report also found that listings were down 21.2% from a year ago due to elevated mortgage rates and high home prices.
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