Mortgage rates ended in 2022 moving slightly higher following an extended run of declines, giving a final reminder to house hunters that buying a home in 2023 will continue to be an expensive proposition.
The 30-year fixed-rate mortgage averaged 6.42% as of Dec. 29, 2022, according to Freddie Mac. That was up from 6.27% the previous week and more than double the 3.11% average a year ago. The 15-year fixed-rate mortgage dipped slightly to an average of 5.68% as of Dec. 29 from 5.69% a week earlier. Last year, the 15-year FRM averaged 2.33%.
The increase in the 30-year FRM ended a run of six straight weeks of lower rates, CNN reported.
“The housing market remains in the doldrums with declining sales, inventory and prices,” Freddie Mac Chief Economist Sam Khater said in a statement. “The declines in sales and deceleration in home prices began swiftly earlier in 2022 but have moderated more recently. While the intensity of weakness is moderating, the market continues to decline and forward-leading indicators suggest housing will remain weak throughout the winter.”
Average home prices have fallen in some parts of the country due to a slowdown in demand, driven partly by rising borrowing costs that have pushed many potential buyers out of the market. Even with home prices dropping, they remain historically high.
Meanwhile, mortgage rates have been increasing at their fastest pace since the 1980s, Fox Business reported. Freddie Mac expects rates to remain elevated in 2023. The mortgage company recently estimated that the average rate for a 30-year mortgage will hover around 6.4% in 2023. That’s up from an average of 5.4% in 2022 and 3% in 2021.
Mortgage rates started moving higher earlier this year when the Federal Reserve implemented a series of aggressive interest-rate hikes to tame soaring inflation. Although inflation has dropped in recent months, the Fed is expected to keep raising rates next year, which will likely have a ripple effect on mortgage rates.
“Higher rates are likely to stick around until inflation makes much bigger strides back toward the 2% [inflation] target,” Realtor.com said in a recent report.
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