U.S. mortgage rates have increased to their highest level in six weeks, but they still offer stability for potential homebuyers. According to data released by Freddie Mac on January 25, the average rate for a 30-year fixed-rate mortgage is now 6.69%, up 9 basis points from the previous week. However, despite the increase, rates have remained well below 7%. Last year, the 30-year average rate was 6.13%.
Rise in Rates
The average rate for a 15-year mortgage has also seen a slight increase from 5.76% to 5.96% in the previous week. A year ago, the 15-year average rate was at 5.17%.
Insights from Freddie Mac
Sam Khater, the chief economist at Freddie Mac, noted that due to the stabilization in rates, potential homebuyers with affordability concerns are returning to the market. He expects the spring homebuying season to be busier than in 2023, with home prices continuing to rise steadily.
According to Lisa Sturtevant, the chief economist at Bright MLS, falling rates are encouraging for home buyers. She explains that at a 7% interest rate, the monthly payment for a $400,000 home would be around $2,900. However, if rates fell to 6%, the monthly payment for the same home would decrease to about $2,700.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, believes that despite the slight increase in rates, the mortgage market's momentum remains strong at the beginning of this year. He notes that along with the expectation of a gradual decline in rates, positive data on homebuyer sentiment and pending home sales indicate a promising spring ahead.
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