Mortgage rates have resumed their upward trend but some homebuyers seem to be persevering anyway.
As of Thursday, the 30-year, fixed-rate mortgage averaged 6.84%, according to mortgage giant Freddie Mac’s weekly survey. It’s an increase from the previous week's average of 6.78% but a significant decrease from the same time last year when rates averaged 7.29%.
Daily measures of that figure showed the same trend. Mortgage rates are affected by movement in the bond market, and on a daily basis, they are typically more volatile than weekly averages.
By Thursday afternoon, the 30-year, fixed-rate mortgage had climbed to 7.05%, according to Mortgage News Daily. That means if a homebuyer who took out a $250,000 mortgage on Thursday afternoon, they would pay around $1,672 each month.
At the same time, the 15-year, fixed-rate mortgage average had also risen as of Thursday, the survey said. It averaged 6.02%, higher than the previous week’s average of 5.99% but lower than the average of 6.67% from the same time a year earlier.
And on a daily basis, the 15-year, fixed-rate mortgage had eased slightly from a day earlier and was at 6.41%.
Inventory lures buyers
The increase in mortgage rates comes despite the post-election and post-Federal Reserve interest rate cut softness in the mortgage market that some professionals and consumers expected. But there’s some hope to be found in the recent trends, according to Matthew Graham, chief operating officer of Mortgage News Daily.
Unlike the end of October and beginning of November when mortgage rates saw their “fastest rate spike” in two years, the market is “much calmer” though rates are now higher, he wrote in a post on Wednesday.
“In the days following the election, there was quite a bit of volatility in rates, but with the benefit of hindsight, we can say that the volatility has subsided,” Graham said.
That absence of volatility has come at a time when the supply of houses for sale has been inching upward. Combined, these two factors have brought some buyers back into the housing market.
Mortgage applications, for example, have increased over the past two weeks, driven by an uptick in first-time homebuyer activity, according to data from industry group the Mortgage Bankers Association.
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“Rising housing inventory in the entry-level price range appears to be boosting interest among some prospective first-time buyers,” Bob Broeksmit, MBA president and CEO said in a statement.
And sales of pre-owned homes increased in October, the National Association of Realtors said Thursday. It’s the first annual increase in sales since July 2021, and it’s a sign that buyers are getting access to a greater supply of housing and finding more mobility in the market.
“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, NAR's chief economist, in a statement Thursday. He earlier forecast that mortgage rates will settle around 6% by the end of 2025.
“While mortgage rates remain elevated, they are expected to stabilize," Yun said.