The average mortgage rate for the 30-year fixed term climbed higher this week, marking the highest level recorded in six weeks.
The mortgage rate for the 30-year term rose to 6.69% in the week ending Jan. 25, increasing by 0.09 points from last week's 6.60% and climbed by 0.56 points from 6.13% a year ago, according to Freddie Mac's Primary Mortgage Market Survey.
In addition, the rate on a 15-year mortgage also increased this week, up 0.2 points to 5.96% from last week's 5.94%. The mortgage rate is also up 0.79 points from last year's 5.17%
Having said that, mortgage rates have retreated more than 110 basis points within the last three months since it soared past 8% in October.
Will Mortgage Rates Rise Again?
Despite the recent increase, experts believe mortgage rates will continue to decline throughout the year. Economists at Fannie Mae predicted that the slowing economic growth will bring rates down to 5.8% by the end of the year and 5.5% by the first quarter of 2025.
"While we think financial markets may have gotten ahead of themselves regarding the extent of Federal Reserve rate cuts this year (we currently forecast 100 basis points of cuts in 2024), the outlook for both short term rates and mortgage rates is now decidedly lower than what we had previously forecast," Fannie Mae said in a statement.
"We anticipate that after the past several years of extreme volatility in interest rates, the 30-year fixed rate mortgage rate will continue to moderate over the course of 2024, moving toward a rate below 6% by year end."
How Is the Housing Market Responding?
Despite rising mortgage rates, applications increased 3.7% from a week prior on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA) in its weekly survey ending Jan. 19. On an unadjusted basis, the index fell by 4% compared with the previous week.
The survey also found that the average contract interest rate for a 15-year term increased to 6.31% last week from 6.24% the week before. For the 30-year fixed-rate mortgages, the average contract interest rate rose to 6.78% from 6.75%.
